TSMC Industrial Espionage Case Heads to Verdict as Former Engineer Faces Up to 20 Years for 2nm Trade Secret Theft

Taiwan's judicial system is preparing to deliver a landmark verdict on April 27 in what prosecutors describe as the first case invoking the National Security Act in semiconductor manufacturing espionage. The trial centers on former TSMC engineer Chen Li-ming, accused of orchestrating the theft of critical 2nm process technology information that could reshape Taiwan's position in the global chip industry.

The Scale of the Alleged Theft The case involves the alleged theft of technical information about TSMC's 2nm manufacturing processes, representing some of the most advanced semiconductor technology currently under development. According to court documents, Li-ming, who previously worked in yield management at TSMC, allegedly recruited multiple colleagues to extract confidential data after joining Tokyo Electron Taiwan's marketing department.

The prosecution claims Li-ming convinced TSMC engineers Wu Bing-chun and Ko Yi-ping to siphon key technical specifications about 2nm processes around 2023. The stolen information allegedly included detailed manufacturing parameters, yield optimization techniques, and proprietary process recipes that represent years of TSMC's research and development investment.

Multiple Charges, Multiple Defendants Beyond the 2nm case, prosecutors have filed separate charges involving a second alleged espionage operation. This indictment accuses Li-ming of coordinating with another TSMC employee, Chen Wei-chieh, to photograph trade secrets related to 14nm chip technology. The operation reportedly involved a Tokyo Electron manager identified only as Lu, who allegedly provided guidance for the theft.

What makes these cases particularly serious is the alleged destruction of evidence. Prosecutors claim the conspirators shared stolen information through cloud platforms, creating digital trails that investigators later uncovered. The destruction of evidence charge adds another layer of severity to what prosecutors argue was a coordinated campaign to undermine TSMC's competitive advantage.

Potential Sentences and Legal Precedent If convicted on all charges, Li-ming faces a cumulative sentence that could reach the 20-year maximum under Taiwanese law for related offenses. The specific charges carry varying penalties: up to 14 years for the 2nm theft, nearly nine years for Wei-chieh's involvement in the 14nm case, and additional time for evidence destruction.

The case marks the first time Taiwanese courts have applied the National Security Act to semiconductor manufacturing, elevating industrial espionage from a commercial matter to a national security concern. This legal interpretation reflects growing recognition that semiconductor technology represents critical infrastructure for Taiwan's economy and geopolitical standing.

Corporate Liability and Financial Penalties Tokyo Electron Taiwan faces its own legal consequences, with prosecutors seeking NT$145 million (approximately $4.52 million or €3.95 million) in fines. The charge alleges the company failed to implement adequate safeguards against industrial espionage by its employees.

This corporate penalty, while substantial, represents a fraction of the potential damage to TSMC's intellectual property portfolio. The case highlights the challenges multinational corporations face in preventing insider threats, particularly when employees move between competing firms in the same industry.

Broader Context of Semiconductor Espionage

The Li-ming case emerges against a backdrop of increasing concern about technology transfer and intellectual property protection in the semiconductor industry. While most political attention focuses on tariffs and export controls for AI accelerators, cases like this demonstrate the persistent threat of industrial espionage.

Similar cases have emerged globally, including the ongoing trade secret indictment against Intel engineer Wei-Jen Lo, suggesting a pattern of insider threats across major semiconductor manufacturers. These incidents underscore the high stakes involved in advanced chip manufacturing, where process technology advantages can translate to billions in market value.

Implications for Taiwan's Semiconductor Security

The invocation of national security laws in this case signals Taiwan's intent to treat semiconductor intellectual property as strategic national assets. This legal framework could influence how other countries approach protecting their domestic chip industries, particularly as semiconductor manufacturing becomes increasingly concentrated in geopolitically sensitive regions.

For TSMC specifically, the case represents both a legal victory in terms of prosecution and a reminder of the persistent threats to its technological leadership. The company's 2nm technology, which the alleged theft targeted, represents the cutting edge of semiconductor manufacturing, with potential applications in everything from AI accelerators to mobile processors.

Timeline and Next Steps The April 27 verdict will conclude the first phase of what has been a complex, multi-jurisdictional investigation. The second case involving the 14nm technology theft remains ongoing, with no sentencing date set. Taiwanese courts typically consolidate related charges for sentencing, suggesting Li-ming could face a single, comprehensive judgment covering all alleged offenses.

As the semiconductor industry continues to advance toward smaller process nodes and more complex chip architectures, cases like this highlight the ongoing tension between technological collaboration and the need to protect intellectual property. The outcome of this landmark trial could influence how companies structure employee mobility, data access, and security protocols in an industry where a single breakthrough can shift market dynamics.

The verdict will be closely watched not only in Taiwan but across the global semiconductor supply chain, as companies assess the effectiveness of legal protections for their most valuable technological assets.