TSMC trade secrets leak puts Japan’s Tokyo Electron on hot seat

Among the six people arrested by Taiwanese prosecutors for allegedly stealing trade secrets from the world’s largest contract chipmaker was a former employee at Tokyo Electron. Now, the Japanese company – one of the world’s biggest suppliers of chipmaking tools – is struggling to address the potential fallout with one of its most important customers and with governments in Tokyo and Taipei.

Tokyo Electron said that it fired an employee at its Taipei unit in connection with the case and was cooperating with the ongoing investigation. Its shares fell 2.5 per cent on Thursday to their lowest since late April.

Taiwan makes the most advanced semiconductors in the world, and its companies have regularly been targeted for their intellectual property by entities with ties to China, which is pushing hard to develop its own chip capabilities. The Tokyo Electron arrest raises questions about why its employee would be involved in such an endeavour, whether it would have any motivation to steal TSMC trade secrets and whether the case ties into Japan’s own ambitions to build a domestic chip industry.

“The fact that Tokyo Electron has come under the spotlight in this way feels like an unfortunate accident,” said Atsushi Osanai, a professor at Waseda University.

On Wednesday morning, in team meetings around the organisation, Tokyo Electron employees were instructed to refrain from talking about the case, people familiar with the matter said, asking not to be named describing private information. Company managers flew to Taiwan to deal with the aftermath, one person said.