On Aug. 27, Taiwan's High Prosecutors Office Intellectual Property Branch indicted three current and former employees of Taiwan Semiconductor Manufacturing Co. (TSMC) for allegedly stealing trade secrets related to the company's advanced 2-nanometer process technology.

The defendants — former TSMC engineer Chen Li-ming, and current employees Wu Ping-chun and Ko Yi-ping — were charged with theft of trade secrets and violating Taiwan's National Security Act by illegally obtaining national core technology for use abroad. Prosecutors are seeking sentences of 14 years for Chen, nine years for Wu, and seven years for Ko, reflecting what they called the "serious threat to Taiwan's semiconductor competitiveness."

According to prosecutors, Chen left TSMC to join Tokyo Electron Ltd. (TEL), a Japan-based supplier that had been attempting to qualify equipment for TSMC's 2nm production line. Chen allegedly recruited Wu and Ko to access TSMC's remote database and photograph sensitive process documents, including etching parameters critical to advanced node performance. Over a dozen photos were deemed to contain highly confidential information.

TSMC discovered irregularities during internal checks and filed a complaint with prosecutors on July 8. Between July 25 and 28, prosecutors led multiple raids and interrogations, resulting in the arrest and incommunicado detention of the three suspects. All have confessed to the crimes, according to officials.

Prosecutors described the case as the first to involve violations of the National Security Act through unauthorized access to Taiwan's "national core technology." They added that further investigations are underway to determine whether any corporations or other individuals bear additional criminal liability.

TSMC said in a statement that it maintains a "zero-tolerance policy" toward breaches of trade secrets and welcomed the prosecution's action. The company pledged to reinforce its monitoring systems, including tighter restrictions on internal data access, in order to safeguard its competitive edge in the global semiconductor market.

Industry analysts warn the breach could have broader implications. TEL, a major shareholder and supplier to Japan's Rapidus Corp., may have gained knowledge that could accelerate Japan's efforts to mass-produce 2nm chips, potentially narrowing the technology gap with TSMC. Rivals such as Samsung and Intel could also benefit if etching and process data were to inform equipment optimizations.

TSMC has already upgraded internal protections, including banning mobile devices in sensitive areas and embedding digital watermarking in confidential documents, to prevent future leaks.