Taiwan's First Chip-Espionage Prosecution: Ex-TSMC Manager Indicted Over Alleged Leak Plot for China

Taiwan has crossed a legal threshold in the chip war. Prosecutors have indicted a former TSMC deputy manager for allegedly attempting to funnel the company's core process technology to China — the first time corporate espionage in the island's semiconductor industry has been prosecuted under the National Security Act's "national core technologies" provisions, according to Tom's Hardware and Digitimes.

The former manager, surnamed Chen, is charged under both the National Security Act and the Trade Secrets Act, with prosecutors requesting a seven-year prison sentence. Digitimes reports the case encompasses four former TSMC employees in total, with a former senior engineer allegedly recruiting colleagues to photograph confidential files and transfer them via cloud storage.

The alleged plot

Between 2023 and 2024, Chen allegedly conspired with a Hong Kong national to establish CSMAC, a semiconductor materials analysis company in China, and copied 21 TSMC documents designated as national core technologies — the classification Taiwan applies to its most advanced process nodes.

The indictment's most explosive allegation reaches beyond commerce: investigators say the Hong Kong national, Ding Xiaohu, was acting on instructions from the Chinese Communist Party's Central Military Commission Political Work Department, repeatedly entering Taiwan to recruit agents and collect intelligence on critical technologies. Ding died earlier this year and was never charged.

TSMC's monitoring caught it

TSMC's internal security systems flagged the irregular file activity, and the company says its investigation recovered every improperly copied document before the material left its control. That detail cuts both ways: the safeguards worked, but the world's most important chipmaker was penetrated by an insider recruitment operation allegedly run by Chinese military intelligence.

A new legal era for the silicon shield

Taiwan added the national core technologies espionage provisions to its National Security Act in 2022 precisely for this scenario, but had never used them against the semiconductor industry. The first prosecution — against a former employee of the company that anchors the island's "silicon shield" — establishes the template: chip-process leakage to China is now treated as a national security crime, not a commercial dispute.

The timing sharpens the message. The indictment comes as reports of China's domestic DUV lithography breakthrough rattle global chip markets and as CXMT's record Shanghai debut showcases Beijing's determination to build a self-sufficient memory industry. Taiwan's message to its engineers is unambiguous: the technology in your head is now a matter of state.