Tokyo Electron Terminates China Executive Over Investment in Competitor

Japanese semiconductor equipment giant Tokyo Electron (TEL) finds itself embroiled in another controversy, this time involving its China operations. The company has terminated its contract with Jay Chen, a senior executive who led its Shanghai division, after an internal probe uncovered alleged conflicts of interest involving investments in Chinese competitors.

The investigation, prompted by suspicions that emerged in late 2024, revealed that Chen's family, through investment partnerships, backed several Chinese startups. Crucially, one of these companies, Suzhou Core-Wise Semiconductor, initially provided engineering services for TEL's equipment but later developed its own chip manufacturing tools, including coating and developing equipment, a sector where TEL holds a dominant global position. Chen himself was also co-founder of another firm, Shenghong Yeyuan Semiconductor Equipment (Shanghai), operating in a market segment where TEL has a significant share.

This development comes shortly after TEL was fined NT$150 million by Taiwan's Intellectual Property Court for chip technology leakage, underscoring a pattern of challenges the company faces regarding intellectual property and competitive practices. The case of Jay Chen highlights the complex economic security landscape in the strategic technology sector, where corporate governance and insider risks are increasingly scrutinized. As noted by Akira Igeta, director of the University of Tokyo's Economic Security Research Office, companies aiming for long-term survival must proactively address these economic security risks.