By Yang Jie and Sherry Qin

A Taiwanese court on Monday sentenced a former Taiwan Semiconductor Manufacturing employee to 10 years in prison over the theft of trade secrets.

The case marks the first time Taiwan has used security legislation to prosecute the stealing of intellectual property involving critical chip technology.

It has been closely watched as a bellwether for how Taiwan manages the security of its semiconductor sector, which is increasingly viewed through the lens of geopolitics. Taiwanese officials have said that corporate theft of sensitive information has surged over the past decade.

Monday's ruling involved multiple defendants indicted for allegedly orchestrating leaks of TSMC's proprietary technology to Japanese equipment maker Tokyo Electron, in violation of Taiwan's security and trade-secret laws.

Chen Li-ming, an ex-TSMC engineer who joined Tokyo Electron and was subsequently dismissed by the Japanese company following his indictment, received a 10-year sentence from Taiwan's Intellectual Property and Commercial Court. Three other engineers received sentences ranging from two to six years.

Separately, a Tokyo Electron manager was convicted of ordering the deletion of confidential TSMC files and received a 10-month sentence, suspended for three years.

Tokyo Electron's Taiwan branch was fined 150 million New Taiwan dollars, equivalent to about US$4.8 million, with the court ordering the company to pay NT$100 million of that to TSMC and the remaining NT$50 million to the state treasury after the firm itself was indicted as a corporate entity.

A court spokesman said all the defendants, including Tokyo Electron's Taiwan branch, have the right to appeal.

TSMC and Tokyo Electron didn't immediately respond to requests for comment.

The court said Chen solicited confidential files from three other engineers, who were employed at TSMC at the time, to improve Tokyo Electron's machinery.

A court spokesperson said that, based on information provided by TSMC, Tokyo Electron--which is a supplier rather than a competitor of the Taiwanese company--didn't leak any of the materials.

The specific terms of the settlement between the two companies remain confidential and haven't been disclosed, he added.

The court said Tokyo Electron failed to properly supervise Chen, noting that internal performance evaluations noted his ability to "leverage existing client resources," and obtain customer and competitor information.

The investigation was triggered last July after TSMC's internal security systems detected irregular access to confidential data.

TSMC, which manufactures chips for industry giants including Apple and Nvidia, has maintained that it will take action against trade-secret theft to defend its competitive advantage.

Tokyo Electron has previously said that it cooperated with local authorities throughout the investigation.

Shares of both companies were little moved after the ruling. TSMC was last up 5.3% and Tokyo Electron was 3.0% higher.

Write to Yang Jie at jie.yang@wsj.com and Sherry Qin at sherry.qin@wsj.com

(END) Dow Jones Newswires

April 27, 2026 02:48 ET (06:48 GMT)

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