Taiwan’s Intellectual Property Division under the High Prosecutors Office said on July 21 that it had indicted a former Taiwan Semiconductor Manufacturing Co. (TSMC) manager surnamed Chen, accusing him of conspiring with Ding Xiaohu to set up a semiconductor materials analysis company in China and illegally reproducing 21 confidential TSMC technical documents for use there. Prosecutors are seeking a seven-year prison sentence on suspected violations of Taiwan’s National Security Act and Trade Secrets Act.
Prosecutors link the case to the so-called Blue Ocean Plan
According to Liberty Times Net, prosecutors said Chen and Ding had conspired between May 2023 and February 2024 to establish the China Semiconductor Materials Analysis Company, or CSMAC, in China. The effort was described as part of a "Blue Ocean Plan" that called for a systematic buildout of a semiconductor manufacturing base in China.
Investigators said the plan centered on recruiting Taiwanese semiconductor professionals to work in China, then using those hires as a bridge to keep penetrating Taiwan’s chip industry and sending technical intelligence back to CSMAC. Prosecutors said the goal was to strengthen China’s chip supply chain and gradually weaken the international competitive edge of Taiwan’s semiconductor sector.
Chen allegedly copied 21 confidential files while at TSMC
Prosecutors said Chen allegedly reproduced the 21 files while serving as a TSMC deputy manager, seeking to demonstrate his credentials in semiconductor process and materials work to Chinese investors and technical experts. The files were said to cover national critical technologies and ordinary trade secrets related to semiconductor manufacturing processes and materials.
Authorities said Chen took the documents home to study them and intended to send the technical information to China, using it as leverage to enter the Chinese market and build out a business operation there.
Case emerged from a broader espionage probe involving Ding Xiaohu
The case grew out of a national security investigation into Ding Xiaohu. The report described Ding as a Chinese citizen holding a Hong Kong passport and also serving as a member of the Ethnic, Overseas Chinese and Foreign Affairs Committee of the Changsha Municipal People’s Congress. Prosecutors said he was suspected of being dispatched by the Political Work Department of China’s Central Military Commission and had repeatedly applied to enter Taiwan under business or tourism pretexts. He was also accused of recruiting six active-duty and retired Taiwanese military personnel to build an espionage network and collect military secrets.
That case was concluded and prosecuted in November last year. Ding died of illness in February this year, and prosecutors issued a non-prosecution decision in his case. Investigators said they discovered the alleged TSMC trade secret theft while tracing Ding’s organizational network in Taiwan, then opened a separate investigation into Chen.
TSMC says internal audit recovered all files
TSMC detected irregularities during a routine audit and launched an internal investigation, according to the report. The company recovered all 21 copied technical documents, and prosecutors said the material did not actually make its way to China. Investigators later searched five related locations and, after comparing electronic records with physical evidence, moved ahead with the indictment.
The report added that Taiwan has stepped up legal protection for critical technologies such as semiconductors in recent years, as Chinese companies have actively recruited Taiwanese engineers and sought access to advanced chipmaking know-how. TSMC is a key supplier to companies including Nvidia and Apple and remains central to Taiwan’s economy and international competitiveness.