The news
TSMC trade secrets are at the center of an indictment announced on July 20, 2026. Taiwan prosecutors charged a former deputy manager at Taiwan Semiconductor Manufacturing Co. (TSM), surnamed Chen, under the National Security Act, alleging he copied 21 confidential documents to use in China.
The Intellectual Property Branch of the Taiwan High Prosecutors Office also charged Chen under the Trade Secrets Act and asked the court for a seven-year prison sentence, according to its press release. Prosecutors said the files included trade secrets covering national core key technologies, a category protected under the National Security Act, as well as general trade secrets. They described it as Taiwan's first indictment over core-technology secrets intended for mainland China.
According to the prosecutors, between May 2023 and February 2024 Chen and Ding Xiaohu, whom Focus Taiwan identified as a Hong Kong national, planned to set up a semiconductor materials analysis company in China called CSMAC. Chen drafted a "Blue Ocean Plan" to recruit Taiwanese chip talent to the company. Prosecutors allege he copied the documents without authorization to convince financiers and technical experts introduced by Ding of his process and materials expertise, and took them home to study.
TSMC noticed irregularities, investigated internally and recovered all of the copied documents, prosecutors said. Focus Taiwan reported that the recovery came before any technology was transferred. Prosecutors said the case surfaced while investigators analyzed evidence seized in a separate probe into an alleged spy network Ding had developed in Taiwan. Ding was not prosecuted because he had died.
Prosecutors and the Ministry of Justice Investigation Bureau's Taipei City office searched five locations, according to the prosecutors. CNA reported that Chen was searched and questioned on May 28, 2026, and then detained at prosecutors' request.
The numbers
- Documents allegedly copied
- 21
- Prison term sought
- 7 years
- Alleged planning period
- May 2023 to February 2024
- Locations searched
- 5
- Detention ordered on July 22, 2026
- 3 months, no visits or communication
Why CEOs should care
For CISOs, the case shows that damaging leaks do not require hacking. Prosecutors describe a manager who copied company documents without authorization and took them home. What limited the damage was internal detection: TSMC spotted irregularities and recovered the files. Security leaders should ask whether they can see bulk copying, printing or downloads of their most sensitive files, who reviews those alerts, and how quickly they could trace and retrieve what left.
For boards and general counsel, the legal stakes in Taiwan keep rising. In a separate case on April 27, 2026, Taiwan's Intellectual Property and Commercial Court sentenced four former TSMC engineers to prison terms of 2 to 10 years under the same law's core-technology provisions, United Daily News reported. It also fined the Taiwan unit of Tokyo Electron, where one engineer worked after leaving TSMC, NT$150 million, suspended for three years on condition it pay TSMC NT$100 million and the national treasury NT$50 million. Companies that hire from Taiwan's chip industry should check whether new hires could bring protected know-how with them.
For HR leaders, the alleged plan depended on recruiting people. Offers tied to new overseas ventures, especially from contacts outside normal channels, deserve attention in access reviews and exit interviews, and access to sensitive documents should end the day an employee resigns.
The bigger picture
Taiwan now treats its chip lead as a matter of national security. In its July 20 release, the prosecutors' office said it would pursue any attempt to leak core technologies to foreign countries, mainland China or other overseas forces strictly and quickly, and described TSMC's technology lead as a benchmark for the competitiveness of Taiwan's whole chip industry.
What happened next
On July 22, 2026, prosecutors transferred Chen to the Intellectual Property and Commercial Court, which ordered him held for three months without visits or communication, CNA reported. The court said Chen had admitted the offenses when questioned, that the charges carry a minimum sentence of three years, and that his repeated trips to China and means to live abroad made him a flight risk. It also cited an alleged accomplice surnamed Huang who had not been brought in. The ruling could be appealed.
What to watch: whether the court extends Chen's detention when the three-month term ends, whether prosecutors charge the accomplice surnamed Huang, and the eventual verdict, which will show how Taiwan's courts sentence secrets copied with intent to use in China but recovered before transfer.
