Taiwanese prosecutors have escalated a major trade secrets case, filing new indictments against Tokyo Electron Taiwan and three individuals for the alleged theft of proprietary technology from Taiwan Semiconductor Manufacturing Company (TSMC). The defendants include two former TSMC employees, both surnamed Chen, and a former Tokyo Electron Taiwan employee surnamed Lu.
Prosecutors are seeking significant prison sentences: seven years for the first former TSMC employee (Chen), eight years and eight months for the second, and one year for Lu, who is accused of destroying digital evidence related to the case. In addition to prison terms, authorities are pursuing a T$25 million fine against Tokyo Electron Taiwan. This is supplementary to a previously requested fine of up to T$120 million (approximately $3.8 million) filed in December.
The new charges follow an expanded investigation that began after the first Chen was indicted in August 2025. Prosecutors allege both Chen defendants illegally reproduced TSMC's core trade secrets. A critical development leading to the new indictment was the discovery that cloud storage systems linked to Tokyo Electron Taiwan still contained TSMC trade secret data. Tokyo Electron Taiwan was previously charged with violating both Taiwan's Trade Secrets Act and National Security Act.
In a brief statement, TSMC acknowledged the supplementary indictment was based on results from extended investigations related to the trade secret lawsuit it filed in August 2025. A company spokesperson stated, "As the case is now under judicial proceedings, we are unable to provide further details at this time." Tokyo Electron has maintained that its Japanese parent company was not indicted and that the case has had no impact on its financial results.
Simultaneously, the global chip supply chain faces intense pressure. Reports indicate that Nvidia has approached TSMC to increase output of its H200 artificial intelligence chips due to surging demand, particularly from Chinese technology companies. Orders from Chinese firms for 2026 reportedly exceed two million H200 units, while Nvidia currently holds an inventory of about 700,000 chips. Nvidia has set prices around $27,000 per chip for Chinese clients, though Beijing has not yet approved shipments of the H200 chips despite a U.S. export clearance order.
Discussions between Nvidia and TSMC suggest production of the additional chips could begin in the second quarter of 2026. Reflecting bullish market expectations, Goldman Sachs recently raised its TSMC price target on Wall Street to NT$2,330 from NT$1,720, reiterating a conviction buy rating.
