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

·SemiconductorsTSMC secrets leak puts Japan’s Tokyo Electron on hot seatBy Takashi MochizukiBy Debby WuBy BloombergBy Takashi MochizukiBy Debby WuBy Bloomberg Tokyo Electron plays a low-file but crucial supporting role to the world’s chipmakers including TSMC, Samsung and Intel, making machines that coat, etch, cess and clean silicon wafers to create semiconductors

Toru Hanai—Bloomberg via Getty ImagesA Taiwanese investigation into the possible theft of chip nology at Taiwan Semiconductor Manufacturing Co. is putting a low-file, lesser-known linchpin in Japan under unusual scrutiny

Among the six people arrested by Taiwanese secutors for allegedly stealing trade secrets from the world’s largest contract chipmaker was a former employee at Tokyo Electron Ltd

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 is cooperating with the investigation

Taiwan makes the most advanced semiconductors in the world and its companies have regularly been targeted for their intellectual perty by entities with ties to China, which is pushing hard to develop its own chip capabilities

The Tokyo Electron arrest raises questions why its employee would be involved in such an endeavor, 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 an unfortunate accident,” said Atsushi Osanai, a fessor at Waseda University

On Wednesday morning, in team meetings around the organization, Tokyo Electron employees were instructed to refrain from talking the matter, 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

So far, the company has not found evidence that trade secrets were d with third parties, Tokyo Electron said

It said it was unable to vide further details on a case under judicial review

Taiwanese secutors have not disclosed many details of their investigation and have not identified who they think was behind the six people arrested

Alongside Applied Materials Inc. and Lam Re Corp., Tokyo Electron plays a low-file but crucial supporting role to the world’s chipmakers including TSMC, Samsung Electronics Co. and Intel Corp., making machines that coat, etch, cess and clean silicon wafers to create semiconductors

Chip industry veterans say they see no reason for Tokyo Electron to engage in an act of intellectual perty theft and risk its relationship with TSMC, the supplier to Nvidia Corp. and Apple Inc. and the world’s biggest spender on chipmaking equipment

Tokyo Electron is privy to its customers’ 10-year nological roadmaps, essential to better pose and develop the most effective chip gear, and that collaboration helps it maintain its nological lead over rivals, its Chief Executive Officer Toshiki Kawai has said. “TSMC is Tokyo Electron’s most important customer and the central player in the semiconductor industry,” said Osanai. “It’s hard to imagine that the company would risk losing all of that by engaging in any wrongdoing.” much of corporate Japan, Tokyo Electron has been caught in the crosshairs of growing tensions between its two largest trading partners, the U.S. and China

The controversy also comes at a low point for Tokyo Electron