Prosecutors say the case grew out of a probe into an alleged Chinese military-linked espionage network.
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However, that alleged transfer never happened. TSMC's internal monitoring systems flagged irregularities, with the company reportedly recovering every improperly copied document after its own investigation, according to the prosecutors' office. A High Prosecutors' Office spokesperson told Nikkei Asia that despite the failed attempt, the case "remains highly significant" as the first of its kind.
Prosecutors found Chen while investigating a separate Chinese espionage case centered on a Hong Kong national named Ding Xiaohu, Taiwan's Central News Agency reported. Investigators allege Ding was acting on instructions from the Nanning station of the Chinese Communist Party's Central Military Commission Political Work Department, entering Taiwan repeatedly to recruit agents and collect intelligence on the island's critical technologies, and that he recruited Chen through an intermediary surnamed Huang. Ding died earlier this year and was never charged.
The state-directed recruitment allegation separates this case from the trade secrets disputes TSMC has fought over the past year, which involved employees allegedly taking confidential data to other chip industry employers.
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Taiwan's National Security Act, in force since 2022, makes it a crime to copy, use, or disclose trade secrets tied to designated national core technologies, a list that includes chipmaking processes more advanced than 14nm. Prosecutors brought the first charges under the law last August, when three current and former TSMC employees were arrested over an alleged attempt to leak 2nm process data. That case grew to ensnare Tokyo Electron's Taiwanese unit , which prosecutors charged with failing to prevent the theft.
TSMC is also pursuing a civil case against Wei-Jen Lo, the former R&D executive who joined Intel last year , with Taiwanese authorities running a parallel national security inquiry into his departure.
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