Taiwanese prosecutors have indicted a former TSMC deputy manager accused of copying confidential chip documents for a planned venture in China, a case authorities describe as a first-of-its-kind national security prosecution involving Taiwan’s most sensitive semiconductor technology.
The defendant, identified by prosecutors only by the surname Chen, allegedly copied 21 confidential documents from Taiwan Semiconductor Manufacturing Co. Some of those files covered technologies that Taiwan classifies as national core technologies, according to prosecutors. They are seeking a sentence of up to seven years. Chen has been detained since late May.
Prosecutors said the alleged leak attempt did not succeed. TSMC’s internal monitoring systems detected unusual activity, and the company recovered all of the improperly copied documents after conducting its own investigation, according to the prosecutors’ office. A High Prosecutors’ Office spokesperson told Nikkei Asia that the case “remains highly significant” despite the failed transfer.
The mechanism alleged by prosecutors is not exotic. Chen is accused of taking files he could access at work, copying them, and bringing them home to study for use in China. That is the boring version of industrial espionage, which is usually the useful version: credentials, documents, recruiting, and a business plan wearing a clean shirt.
Taiwan’s Central News Agency reported that investigators found Chen while probing a separate Chinese espionage case involving Ding Xiaohu, a Hong Kong national. Prosecutors allege Ding operated under instructions from the Nanning station of the Chinese Communist Party’s Central Military Commission Political Work Department. They say Ding repeatedly entered Taiwan to recruit agents and gather intelligence on critical technologies.
According to prosecutors, Ding recruited Chen through an intermediary surnamed Huang. Ding died earlier this year and was not charged.
Prosecutors allege Chen and Ding worked together from May 2023 to February 2024 to establish CSMAC, a semiconductor materials analysis company in China. Chen allegedly wrote several proposals for the company, including one called the “Blue Ocean Plan,” which sought to recruit employees from Taiwan’s semiconductor industry to CSMAC.
That alleged state-directed recruitment is what separates the case from ordinary trade-secret fights, even ugly ones. TSMC has dealt with other disputes involving employees accused of taking confidential data to other chip companies. Prosecutors are framing Chen’s case as an attempted leak of protected national technology to China, not a standard employee defection mess.
Taiwan’s National Security Act, which took effect in 2022, criminalizes copying, using, or disclosing trade secrets tied to designated national core technologies. The protected list includes chipmaking processes more advanced than 14 nanometers, according to prosecutors.
Taiwanese authorities brought the first charges under that law last August, when three current and former TSMC employees were arrested over an alleged attempt to leak 2 nanometer process data. That investigation later reached Tokyo Electron’s Taiwan unit, which prosecutors charged with failing to prevent its staff from stealing trade secrets.
TSMC is also pursuing a civil case against Wei-Jen Lo, a former research and development executive who joined Intel last year. Taiwanese authorities are separately running a national security inquiry into Lo’s departure, according to the reported case history.
This story draws on original reporting from Tom's Hardware.
