Chip Manufacturing Faces Legal Challenges Over Data Theft

Taiwanese prosecutors have charged the Japanese semiconductor company Tokyo Electron with failing to prevent its staff from allegedly attempting to steal trade secrets from TSMC, as reported by Bloomberg.

The prosecutors are targeting Tokyo Electron with charges of violating business secrets and national security laws and are seeking a fine for its failings. Although they stopped short of claiming that Tokyo Electron had made use of the proprietary technologies that its employees allegedly attempted to steal from TSMC, they do hold the company accountable for the attempted theft.

According to the Taiwanese claim, Tokyo Electron lacked evidence of concrete preventive or managerial measures beyond general and cautionary internal rules. Prosecutors determined that the company failed to take necessary steps to prevent the offense and should bear corporate criminal liability under relevant provisions.

This indictment comes after a trio of ex and current employees reportedly attempted to steal data on TSMC's 2nm process node, aiming to help Tokyo Electron enhance its etching machines for better contracts with TSMC.

TSMC, recognized as a leader in silicon fabrication, provides critical semiconductor designs for major tech companies like Nvidia, AMD, and Apple. In this ongoing legal saga, the three individuals involved are facing charges under Taiwan's National Security Act, and prosecutors are seeking jail terms for them.

Tokyo Electron, in response to these allegations, stated that it is cooperating with the investigation and has dismissed one of the employees tied to the incident. The company insists that it has strict policies against wrongdoing and has not received indications that sensitive data was shared with any third party.

Additionally, this is not the first time TSMC has taken legal action against international companies over alleged data theft. Recently, TSMC filed a lawsuit against a former employee who defected to Intel, accused of taking key insights and knowledge with him after over two decades at TSMC.

The unfolding situation highlights the critical role of intellectual property protection in the semiconductor industry, especially amid the explosive growth of the AI sector and geopolitical tensions surrounding Taiwan.

With increasing concerns about national security and competitive practices, the semiconductor industry faces significant scrutiny regarding how it handles sensitive data and trade secrets. The ongoing legal challenges underscore the importance of robust security measures to safeguard technological advancements in an era characterized by intense global competition.