Taiwan indicts ex-TSMC manager for stealing chip secrets from China

The Secret Flow of Silicon: Taiwan Targets Alleged Chip Theft

In a high-stakes battle over technological supremacy, Taiwanese prosecutors have taken a significant step, indicting a former TSMC deputy manager for allegedly attempting to leak highly confidential chip technology to China. This case marks the first instance under Taiwan’s National Security Act where an alleged attempt to transfer the island’s most sensitive semiconductor secrets was pursued by authorities.

The focus of the indictment is on Chen, who is accused of copying 21 confidential documents that cover technologies designated as national core technologies. The intent behind this alleged action was clearly to use this proprietary information in China.

While the legal action speaks to a serious breach of security, the story also involves a fascinating entanglement with broader state-sponsored espionage. Investigators found Chen while probing a separate case centered on a Hong Kong national named Ding Xiaohu. Authorities allege that Ding was acting under instructions from the Nanning station of the Chinese Communist Party’s Central Military Commission Political Work Department, repeatedly entering Taiwan to recruit agents and gather intelligence on critical technologies.

The alleged network between Chen and Ding is detailed by prosecutors. They claim that Chen and Ding worked together between May 2023 and February 2024 to establish CSMAC, a semiconductor materials analysis company in China. This venture included proposals like the “Blue Ocean Plan,” which aimed to lure workers from Taiwan’s thriving chip industry into the Chinese enterprise.

Crucially, prosecutors allege that Chen took the copied TSMC documents home to study and utilize them for their scheme. This narrative separates this specific action from the larger trade secret disputes TSMC has faced in recent years, which have involved employees allegedly taking confidential data to other chip industry employers.

The legal foundation for these charges is provided by Taiwan’s National Security Act, enacted in 2022. This act makes it a criminal offense to copy, use, or disclose trade secrets tied to designated national core technologies, a list that notably includes chipmaking processes more advanced than 14nm.

Despite the serious accusations, the process of recovery was part of the investigation. TSMC’s internal monitoring systems flagged irregularities, and the company reportedly recovered every improperly copied document following its own internal review.

Even though the physical transfer of data never materialized, the High Prosecutors’ Office views the case as highly significant. A spokesperson for the office noted that it represents the first instance of this kind of attempted leak under the National Security Act, underscoring the profound implications for the future of Taiwan’s technological dominance.