Taiwan's Minister of Economic Affairs Kung Ming-hsin, on September 10, 2025, declined to comment on an alleged trade secret theft targeting TSMC's 2nm process technology amid concerns that the case could affect Taiwan-Japan relations. Kung only stated that the investigation should follow the evidence wherever it leads, emphasizing that the ministry respects the judicial authorities' findings.
Unlikely perpetrator emerges
A former TSMC engineer who joined Tokyo Electron (TEL) allegedly sought to improve the performance of 2nm etching machines being developed by the Japanese semiconductor equipment maker when he received help from two TSMC employees in allegedly stealing trade secrets from the foundry giant. All three have been indicted for the alleged leak and were fired by their companies.
The case came as a surprise as it involved an employee from a Japanese company rather than one from China, which has been eager to break through technological bottlenecks in chip manufacturing.
Investigation scope widens
The Taiwan High Prosecutors' Office is now trying to determine whether the engineers acted individually or under instructions from the Japanese company. Clearing the Japanese company's name will be necessary if neither TEL nor its subsidiary in Taiwan was behind the alleged leak.
Since TSMC's 2nm technology represents the world's most advanced semiconductor process, the case has been prosecuted under the National Security Act. If found guilty of industrial espionage, the three suspects could face severe prison sentences.
Kung emphasized that while he cannot comment on the judicial investigation, he reiterated the Ministry of Economic Affairs' stance that actions must be taken according to the evidence. This means that serious illegal activities should never go unpunished, but the innocent must not be wrongfully prosecuted.
Performance pressure drives alleged theft
There has been speculation about the motivation behind the TEL engineer's alleged attempt to steal data concerning TSMC's 2nm process technology. Reports suggest the engineer faced performance pressure at the Japanese company and sought help from former colleagues who were still working at TSMC as early as August 2023. The alleged goal was to obtain critical data so that the Japanese company's equipment could pass TSMC's verification, facilitating transactions and procurement.
TSMC detected irregularities and reported the alleged leak to prosecutors and investigators on July 8, 2025, bringing the case to light. The Investigation Bureau immediately launched two rounds of searches and interrogations. The authorities determined that the case seriously threatened national security and industry competition, and obtained court approval for the detention of the suspects. The prosecutors are seeking prison terms of seven to 14 years for the defendants.
National Security Act amended to address new threats
The National Security Act was amended in 2022 as Taiwan realized that competition between countries now extends beyond military hardware to technological and industrial capabilities. The concept of national security thus includes economic development and industrial competitiveness as vital components of national progress.
In recent years, Taiwan's high-tech sector has repeatedly suffered from the poaching of senior research and development talent and the theft of core industrial technologies by competitors from China, Hong Kong, Macau, and other regions, severely impacting Taiwan's high-tech development and competitiveness. Given the inadequacies of the Trade Secrets Act, additional protective measures were incorporated into the National Security Act, explicitly punishing anyone stealing Taiwan's core technologies on behalf of other countries or foreign institutions.
On March 31, 2025, the Taiwanese government announced revisions to the list of national core technologies, totaling 32 items. These include integrated circuit manufacturing processes below 14 nanometers and related critical gases, chemicals, and equipment technologies. High-performance chip design technologies for artificial intelligence computing were also added to the list. Violators convicted of economic espionage face five to 12 years in prison, plus fines ranging from NT$5 million (US$165,000) to NT$100 million.
Article edited by Jerry Chen
