Taiwan hits Japanese firm with indictment in TSMC data theft saga — Tokyo Electron charged with failing to prevent its staff from stealing trade secrets

Taiwanese prosecutors have charged the Japanese semiconductor company Tokyo Electron with failing to prevent its staff from allegedly attempting to steal trade secrets from cutting-edge silicon wafer firm 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 it accountable for the attempted theft.

"[...] apart from general and cautionary internal rules, the company lacked evidence of concrete preventive or managerial measures," the Taiwanese claim reads. "Prosecutors therefore determined that the company failed to take necessary steps to prevent the offence and should bear corporate criminal liability under the relevant provisions."

This all stems from an attempted theft of TSMC data earlier this year that saw a trio of ex and current employees steal data on TSMC's 2nm process node, reportedly to help Tokyo Electron improve its etching machines so it could get more TSMC contracts. This is some of the most sensitive and cutting-edge technology that TSMC owns, and represents a key component of its business. It is considered to be the most cutting-edge firm in terms of silicon fabrication, providing the underlying semiconductor designs for the likes of Nvidia, AMD, and Apple to build their various computing products.

While the three individuals are being charged under Taiwan's National Security Act, prosecutors are now targeting Tokyo Electron itself, claiming it had some responsibility in the theft and should have done more to stop it.

Taiwan is seeking jail terms for the people who committed the theft. Tokyo Electron has said it is cooperating with the investigation and has fired one of the employees connected with it. It also claims that it has strict policies against wrongdoing by its staff, and has not received any indication that sensitive data has been passed on to a third party.

Tokyo Electron has said it is seeking clarification on the announcement from Taiwanese authorities, but hasn't officially responded at the time of writing.

This is the second major action TSMC has taken against international companies it claims have gone after its key technologies. It recently filed a lawsuit against another ex-employee who defected to Intel, claiming they may have taken key insights and knowledge of key technologies with them, having spent 21 years previously as a high-ranking executive at TSMC.

With the explosive growth of the AI industry and China's ever-present interest in reintegrating Taiwan with mainland China, potentially through military means, TSMC and Taiwan have been reasserting their importance to global security. The new Japanese Prime Minister recently said the country would defend Taiwan in the event of a Chinese invasion, causing a minor diplomatic incident.

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