Tokyo Electron Taiwan Hit with Fresh Charges as TSMC Trade Secrets Scandal Widens

Another layer of legal trouble unfolds for Tokyo Electron Taiwan, with prosecutors slapping new charges on the semiconductor equipment supplier. The move signals a significant escalation in the sprawling investigation into alleged theft of trade secrets from Taiwan Semiconductor Manufacturing Company (TSMC).

The Expanding Web

This isn't a simple case of corporate espionage—it's a widening crackdown. The new charges suggest investigators are digging deeper, potentially uncovering a more extensive network or additional compromised data. For TSMC, the global leader in advanced chipmaking, it underscores the relentless pressure to guard its crown-jewel intellectual property. Every nanometer of process technology represents billions in R&D and market advantage.

A Sector on Edge

The scandal sends a chill through the intricate ecosystem of suppliers, partners, and competitors. Trust is the invisible substrate the industry runs on. When a major player like Tokyo Electron—a critical link in the global supply chain—faces such serious allegations, it forces every boardroom to re-evaluate its security protocols and partnership vetting. It's a stark reminder that in the race for technological supremacy, the battles aren't just fought in cleanrooms and design labs.

The fallout extends beyond courtrooms. Shareholders are left weighing the risks of prolonged litigation and potential reputational damage against the company's strategic importance. It's the classic finance conundrum: how do you price the cost of a shattered trust? Usually, it's a lot more than the legal fines.

As the case grows, so does the scrutiny on how the industry protects its most valuable assets. The outcome will set a precedent, potentially reshaping collaboration agreements and non-disclosure frameworks for years to come. For now, the only thing spreading faster than the investigation may be the sense of unease across the semiconductor world.

TLDR

• Taiwanese prosecutors filed new indictments against Tokyo Electron Taiwan and three individuals over alleged TSMC trade secret theft.
• The defendants include two former TSMC employees and one former Tokyo Electron Taiwan employee.
• Prosecutors are seeking prison sentences ranging from one year to eight years and eight months for the accused individuals.
• Investigators discovered TSMC trade secret data stored in cloud systems linked to Tokyo Electron Taiwan.
• One of the defendants was accused of destroying digital evidence related to the case.

Taiwanese prosecutors filed a new indictment against Tokyo Electron Taiwan and three individuals tied to the ongoing TSMC trade secrets case, as authorities discovered further evidence through extended investigations, and they now seek prison sentences and financial penalties.

Prosecutors Expand Charges and Target Tokyo Electron Taiwan

Prosecutors on Monday filed new charges against Tokyo Electron Taiwan and three individuals over alleged TSMC trade secret theft. The three accused include two former TSMC employees, both surnamed Chen, and a former Tokyo Electron Taiwan staffer surnamed Lu. Authorities confirmed all were connected to earlier findings involving TSMC’s proprietary data.

They are now seeking prison terms for each defendant following expanded investigative efforts. The first Chen may face seven years, while the second Chen could receive eight years and eight months. Prosecutors want a one-year sentence for Lu for his alleged role in destroying evidence.

The investigation deepened after the August 2025 indictment against the first Chen. That case also named Tokyo Electron Taiwan under both the Trade Secrets Act and the National Security Act. Prosecutors cited fresh findings in cloud storage systems to justify a new indictment.

New Evidence Found on Cloud Systems, Lu Accused of Obstruction

Investigators reported discovering TSMC trade secret data within cloud platforms linked to Tokyo Electron Taiwan. This discovery played a direct role in filing the new set of indictments this week. Prosecutors said it showed unresolved risks tied to stolen intellectual property.

Authorities also accused Lu of attempting to delete files tied to the alleged crimes. They believe he knowingly interfered with digital evidence related to TSMC’s confidential technology. Lu’s actions have led to a request for a one-year prison term.

The second Chen was not part of the original charges filed last year. He now faces the longest sentence requested in this legal matter so far. Prosecutors say he also reproduced Core TSMC trade secrets without authorization.

TSMC Responds While Nvidia Seeks Boost in Chip Production

TSMC released a short statement acknowledging the indictment followed its original lawsuit filed in August 2025. “As the case is now under judicial proceedings, we are unable to provide further details at this time,” the spokesperson stated. The company did not comment on the latest forensic findings.

At the same time, Nvidia has asked TSMC to expand production of its H200 AI chips. Chinese companies have placed orders for over two million units for 2026. Nvidia currently holds around 700,000 H200 chips in inventory.

Nvidia has not confirmed the additional number of chips it will require. However, sources said TSMC may begin production in the second quarter of 2026. The supply situation remains tight due to demand from multiple markets.

Nvidia set prices at $27,000 per chip for its Chinese clients. However, Chinese authorities have not yet approved shipments of the H200. This comes despite the U.S. administration’s export clearance under a 2025 order.

Goldman Sachs recently adjusted its TSMC price target on Wall Street. The firm increased its projection to NT$2,330 from NT$1,720. It maintained a conviction buy rating based on current chip demand forecasts.