Taiwanese prosecutors have indicted a former deputy manager of TSMC on suspicion that he copied 21 confidential documents with the intention of using them in China. Some of those documents allegedly refer to technologies that Taiwan classifies as key technologies of national importance.
The prosecution is asking for a sentence of up to seven years in prison for the man, who has been in custody since the end of May. The case is described as the first under Taiwan’s National Security Law to allegedly attempt to export the most sensitive chip manufacturing technologies to China.
According to the prosecution, the actual transfer of documents did not take place. TSMC’s internal monitoring systems discovered the irregularities, and the company reportedly recovered all the improperly copied documents after its own investigation. Despite the failed attempt, a representative of the High Prosecutor’s Office told Nikkei Asia that the case remains very significant, as it is the first of its kind.
A former TSMC manager allegedly copied confidential documents related to key chip-making technologies
The former manager was identified during a special investigation into an alleged Chinese spy network linked to a Hong Kong man named Ding Xiaohu. Taiwanese investigators claim that Ding was acting on the instructions of the Nanning cell, affiliated with the Political Department of the Chinese Communist Party’s Central Military Commission. He reportedly entered Taiwan multiple times to recruit agents and gather information on the island’s key technologies. Ding died earlier this year and was never charged.
According to the indictment, between May 2023 and February 2024, the defendants worked on establishing the company CSMAC in China, which would deal with the analysis of semiconductor materials. A former TSMC manager named Chen reportedly prepared several proposals for the project, including a plan called the “Blue Ocean Plan” aimed at recruiting workers from Taiwan’s chip industry.
The prosecution alleges that Chen took the copied TSMC documents home to study for future use in China. It is the alleged connection to government recruiting that distinguishes this case from earlier trade secrets disputes, in which employees allegedly passed on confidential information to other companies in the chip industry.
Taiwan’s National Security Law, effective from 2022, strictly prohibits the copying, use or disclosure of trade secrets related to key national technologies. That list also includes manufacturing processes for chips more advanced than 14 nm.
Taiwanese prosecutors filed the first charges under the law last August, when three current and former TSMC employees were arrested for allegedly trying to leak information about the 2nm process. That case later spread to the Taiwanese unit of Tokyo Electron, which prosecutors accused of failing to prevent the theft.
TSMC is simultaneously conducting a civil lawsuit against former R&D director Wei-Jen Lo, who moved to Intel last year, while Taiwanese authorities are simultaneously investigating his departure from a national security perspective, writes Tomshardware.