Taiwan prosecutors seek 7-year prison term for ex-TSMC employee who tried to leak secrets to China

Taiwan prosecutors have asked a court to sentence a former employee of TSMC — the world's largest foundry — to seven years in prison for allegedly attempting to leak national core technology to China. The case marks the first indictment in Taiwan involving an attempted transfer of national core technology trade secrets to China.

According to Taiwanese media outlets including Liberty Times and United Daily News, the Taiwan High Prosecutors Office on Monday asked the court to impose a seven-year sentence on a former TSMC deputy manager, identified by the surname Chen, who was charged with violating the National Security Act and the Trade Secrets Act.

Prosecutors said Chen conspired between May 2023 and February 2024 with Ding Xiaohu, a Hong Kong-born individual previously indicted on espionage charges, to establish a semiconductor company in China called China Semiconductor Materials Analysis Co. (CSMAC).

The two are alleged to have pursued what they called the "Blue Ocean Project" — a scheme to recruit large numbers of Taiwanese semiconductor professionals and relocate them to China, with the aim of undermining the competitiveness of Taiwan's semiconductor industry.

To demonstrate his technical capabilities to Chinese investors and technology experts, Chen illegally copied 21 technical documents from TSMC — including materials classified as national security secrets and general trade secrets — took them home and analyzed them in preparation for use in China, prosecutors said.

However, TSMC recovered all leaked technical documents through its own internal investigation and the subsequent prosecutorial probe.

Prosecutors said the case is an extension of a broader operation involving Ding, who serves on the Overseas Chinese Affairs Committee of the People's Congress of Changsha, Hunan Province. Ding allegedly acted on instructions from the Liaison Bureau of the Political Work Department of China's Central Military Commission, making multiple visits to Taiwan from 2018 onward under the guise of business and tourism to recruit military personnel and others.

Investigators obtained leads during their probe into Ding's case and conducted a search and seizure in late May, securing digital records and physical evidence that formed the basis for Chen's indictment.

Ding, the central figure in the case, died of illness in a detention center in February, before he was due to be sentenced in April.

Amid intensifying strategic competition between the United States and China, Beijing has been working to acquire key Taiwanese technology and talent in a bid to boost its domestic semiconductor self-sufficiency.

In response, Taiwan established a dedicated task force within the Ministry of Justice Investigation Bureau in 2020 to counter Chinese semiconductor technology theft and industrial espionage. It has also tightened regulations, including restrictions on Chinese capital investment in critical supply chain sectors such as chip design.