A Taiwanese court has sentenced a former Tokyo Electron employee to 10 years in prison for stealing Taiwan Semiconductor Manufacturing Co.¡¯s (TSMC) proprietary data, highlighting growing alarm over industrial espionage to the island¡¯s most strategic sector.

Ex-Tokyo Electron engineer Chen Li-ming was given the sentence by Judge Chang Ming-huang at Taiwan¡¯s Intellectual Property and Commercial Court on Monday. Four others indicted in the case were given sentences of as much as six years in prison, with one woman getting a 10-month sentence, suspended for three years. A Tokyo Electron spokesperson had no immediate comment.

Tokyo Electron said in a statement it takes the court¡¯s finding ¡°with utmost seriousness.¡± The company has had discussions with TSMC to come up with ways to better protect trade secrets and confidential information, according to the statement. The case has no impact on the Japanese company¡¯s earnings, it said.

The hefty prison term for Chen reflects the Taiwanese government¡¯s renewed efforts to protect its world-class semiconductor industry. TSMC is the primary chipmaker for Nvidia, Apple and Advanced Micro Devices.

Policymakers around the world now consider semiconductors a matter of national security because their capabilities determine the quality of artificial intelligence, supercomputers and defense systems.

The court also fined Tokyo Electron¡¯s Taiwan unit 150 million New Taiwan dollars ($4.8 million) and ordered NT$100 million to be paid to TSMC.

Chen did not leak trade secrets to outside parties beyond Tokyo Electron and its Taiwan unit, and Tokyo Electron tried to mitigate the damage from the incident, according to the ruling. But the Japanese company could have done more to monitor its employees, the judge said. All defendants have the right to appeal the verdict.

Shares of Tokyo Electron rose 2.7% in Tokyo. TSMC¡¯s stock price gained 3.7% in Taipei.

Taiwan is on high alert for technology leaks. Attention is on both long-time partners such as Tokyo Electron as well as entities with ties to Beijing, which is pushing hard to develop its own chip capabilities. In early 2025, Taiwan started an investigation into whether China¡¯s leading chipmaker, Semiconductor Manufacturing International, illegally poached local engineers as part of an effort to access the island¡¯s cutting-edge chip technology.

Last year, prosecutors also searched the homes of a former TSMC executive who joined Intel, after the Taiwanese firm accused him of potentially transferring intellectual property. The U.S. company has rejected those allegations.