TSM's Trade Secrets Case Implicates Tokyo Electron, Analysts Predict 11.25% Upside

Tokyo Electron is accused of using trade secrets from Taiwan Semiconductor Manufacturing Co.'s (TSM) 2-nanometer technology. Despite this, analysts forecast an 11.25% upside for TSM's stock within the next year. The company maintains an "Outperform" status in brokerage recommendations, indicating strong market expectations.

Taiwan prosecutors have indicted three individuals, including a former Taiwan Semiconductor Manufacturing Co. (TSMC) employee, for allegedly stealing trade secrets from TSMC to help Tokyo Electron compete for supplier deals. The case marks the first under Taiwan's National Security Law involving the theft of core technologies. TSMC's 2-nanometer (2nm) chip technology is at the forefront of the semiconductor industry, known for its high density and energy efficiency.

The accused, surnamed Chen, was a former TSMC employee who joined Tokyo Electron and allegedly solicited trade secrets from his former colleagues. Prosecutors are recommending a combined 14-year prison term for Chen for violating Taiwan’s trade secrets and national security laws. TSMC has a zero-tolerance policy toward trade secret violations and is committed to safeguarding its competitive advantage through internal management and regulatory cooperation.

Tokyo Electron has not yet responded to requests for comment. Despite the allegations, TSMC maintains a strong market position, controlling approximately 62% of the global chip market. Its market valuation surpassed $1 trillion in July 2025, driven by high demand for AI and data center chips.

Analysts remain optimistic about TSMC's stock performance. Despite recent volatility, the share price has outperformed the S&P 500 over the past 90 days and year-over-year. The consensus recommendation from 16 Wall Street analysts is to buy shares, with five analysts rating it as a Strong Buy. The average price target in 12 months has risen to $269.76, indicating a 15.8% upside from the current price.

TSMC's strategic partnerships and geopolitical considerations are key drivers for its future growth. The company is actively diversifying its global footprint, including plans to expand manufacturing in the U.S. and the UAE. TSMC's commitment to technological leadership and robust supply chains further underscores its market dominance.

References:
[1] https://www.investing.com/news/stock-market-news/taiwan-prosecutors-indict-three-people-for-stealing-tsmc-trade-secrets-to-help-its-supplier-tokyo-electron-4214164
[2] https://247wallst.com/forecasts/2025/08/25/taiwan-semiconductor-tsm-price-prediction-and-forecast/