TAIPEI (Taiwan News) — Taiwanese semiconductor firms are grappling with a surge in industrial espionage, as stolen technology flows to China to expand its chipmaking capabilities, Nikkei Asia reported Thursday.
Authorities in Taiwan opened 110 probes into trade secret leaks between 2019 and 2023, a 31% increase compared with the previous five-year period, according to the Ministry of Justice. Officials say most cases involve attempts to siphon advanced chipmaking knowledge to Beijing.
The latest case involves three former TSMC engineers who were indicted last month under Taiwan’s National Security Act. Prosecutors accused them of misusing trade secrets abroad, including information tied to the chipmaker’s cutting-edge 2-nanometer technology.
One of the defendants later joined a subsidiary of Tokyo Electron, a major supplier of chipmaking tools. Investigators allege the former employee asked a TSMC engineer to provide confidential data to improve Tokyo Electron’s etching equipment for use in TSMC’s most advanced production lines.
The High Prosecutors’ Office said the former employee confessed to the crimes during questioning. Tokyo Electron, however, issued a statement weeks before the indictment saying its internal review found no evidence of sensitive data being shared with third parties.
The case is scheduled for trial in the Intellectual Property and Commercial Court, which fast-tracks corporate espionage cases. Sentencing guidelines range from five to 12 years in prison for illegally obtaining trade secrets for a foreign country, and three to 10 years for using them overseas.
Prosecutors are seeking a 14-year term for the defendant who later joined a Tokyo Electron subsidiary and shorter sentences for the other two ex-TSMC engineers.
Officials warn that technology leaks remain a serious threat to Taiwan’s semiconductor dominance. Government data show that 48 of the 51 confirmed overseas leaks recorded through 2021 involved transfers to China.
To stem the flow, Taiwan in 2022 amended its National Security Act to explicitly criminalize economic espionage, placing violations under national security law rather than just the Trade Secrets Act. Authorities argue the tougher penalties are necessary to deter cross-border technology theft.
The issue is not unique to Taiwan. South Korea uncovered 96 cases of industrial technology leaks between 2019 and 2023, 38 of them semiconductor-related. Seoul has tightened monitoring of engineers and expanded the powers of its Intellectual Property Office to prosecute offenders.
Japan, once a target of technology leaks to regional rivals, now sees its partners in Taiwan and South Korea bearing the brunt of espionage attempts. Analysts say China’s urgent push to achieve chip self-sufficiency in the face of US restrictions is driving the spike.
“TSMC detected this incident early, so it shouldn’t undermine overall confidence,” said Osanai Atsushi, a professor at Waseda University.
Still, other experts warn that repeated leaks could damage trust between Taiwan and its allies. “If confidential information is compromised, it will affect relationships with friendly countries,” said Su Tzu-yun (蘇紫雲) of the Institute for National Defense and Security Research.
