First Prosecution of Former TSMC Employees for Stealing Chip Secrets
Miles Bennett
Taiwan prosecutors have filed the first-ever charges under the National Security Act against a former TSMC assistant manager for stealing 21 classified documents intended for use in mainland China — this means → Taiwan is now testing whether *attempted* tech leaks carry real criminal consequences, setting a judicial red line for semiconductor protection.
What did this person actually do?
The defendant, surnamed Chen, copied 21 classified TSMC documents without authorization between May 2023 and February 2024, covering national core technologies.
He conspired with a Hong Kong national surnamed Ding to set up CSMAC, a semiconductor materials analysis company on the mainland.
Chen also drafted recruitment plans — including one called "Blue Ocean" — to poach talent from Taiwan's chip industry for CSMAC.
This means → it was not a case of casually taking a few files home. It was a full pipeline: steal secrets, build a company, recruit people.
Did the technology actually get out?
Prosecutors stated explicitly: the technology transfer did not succeed.
TSMC's internal monitoring systems flagged the anomaly, and all copied documents were recovered.
In plain terms = the files were stolen but never delivered — TSMC caught it in-house.
Yet prosecutors charged him anyway. This reflects Taiwan's stance: attempted leaks will be prosecuted, not just successful ones.
Why is this prosecution unprecedented?
Taiwan's National Security Act took effect in 2022, specifically protecting chip processes classified as national core technologies — including advanced nodes at 14 nm and above.
Last year, several former employees of TSMC and its key Japanese supplier Tokyo Electron were charged under the law — the first cases. But this is the first prosecution alleging intent to leak core tech to the mainland.
Prosecutors are seeking up to 7 years in prison.
This means → Taiwan's judiciary is testing whether intent plus action — even without a completed transfer — is enough to convict.
What does this mean for the semiconductor industry?
The central question: can an attempted-transfer case produce a sentence heavy enough to deter?
A heavy sentence sends a clear signal — quitting, taking files, setting up a company, and recruiting is a path that now carries real criminal cost.
A light sentence risks the opposite reading: "if it didn't succeed, nothing happens" — weakening the law's deterrent power.
In plain terms = the outcome of this trial determines whether Taiwan's semiconductor guardrail is a real wall or a paper one.
Content is for reference only, not financial advice.