Taiwan Semiconductor Manufacturing Company Ltd. (NYSE: TSM) sits at the center of a widening legal battle over alleged theft of its trade secrets.
Taiwan prosecutors have charged Tokyo Electron’s Taiwan unit with violating the National Security Act and the Trade Secrets Act, Reuters reported on Tuesday.
Taiwan Semiconductor has also filed a separate lawsuit against a former executive who is now at Intel Corp. (NASDAQ: INTC), accusing him of putting its most sensitive technology at risk.
Tokyo Electron’s Taiwan Unit Charged
Prosecutors charged Tokyo Electron’s local unit on Tuesday under the National Security Act and the Trade Secrets Act. The move follows an earlier indictment accusing a former Tokyo Electron employee of stealing confidential information from the contract chipmaker.
The unit could face fines of up to 120 million New Taiwanese dollars ($3.82 million) if convicted.
Tokyo Electron and its Taiwan subsidiary did not immediately respond to Reuters requests for comment. The company has previously said it found no evidence of organizational involvement in the alleged theft.
TSMC Sues Former Executive Now at Intel
Taiwan Semiconductor has sued former senior vice president Wei-Jen Lo in Taiwan’s Intellectual Property and Commercial Court. The company accuses Lo of posing a serious risk of using or leaking its confidential technology and trade secrets after joining rival Intel.
Taiwan Semiconductor said the lawsuit is based on Lo’s employment contract, his non-compete agreement, and Taiwan’s Trade Secrets Act. Officials have already opened an investigation into whether he took advanced chip data to Intel.
Intel CEO Lip-Bu Tan denied the allegations last week, calling them speculation and saying the company respects intellectual property.
AI-Driven Earnings Power Rally
Taiwan Semiconductor stock has gained 46% year-to-date. The rally follows stronger-than-expected third-quarter results, fueled by surging AI chip demand from major customers such as Nvidia Corp. (NASDAQ: NVDA) and Apple Inc. (NASDAQ: AAPL).
The contract chipmaker reported revenue of $33.1 billion, up 30% year over year and ahead of its forecast. Net income jumped 39% to $15.1 billion. Advanced nodes drove 74% of wafer sales, helping TSMC expand both gross and operating margins.
Management confirmed continued heavy capital spending to meet rising AI requirements. Executives said AI demand remains stronger than anticipated, with customers seeking additional capacity.
For the fourth quarter, Taiwan Semiconductor expects revenue between $32.2 billion and $33.4 billion. The company forecasts profit margins holding above 59%.
TSM Price Action: Taiwan Semiconductor shares were up 1.44% at $291.82 during premarket trading on Tuesday, according to Benzinga Pro data.