Ten individuals indicted for smuggling advanced chips and fraud; enforcement action highlights ongoing prosecution of unauthorized accelerator diversion.
The New Taipei District Prosecutors' Office has indicted 10 people for allegedly using forged documents and fabricated ties to National Chungshan Institute of Science and Technology (NCSIST) to procure controlled semiconductors and smuggle them to China and Hong Kong. The suspects face charges including aggravated fraud for potentially enhancing China's military capabilities, threatening Taiwan's national security, and damaging the nation's international reputation. According to the indictment, they disguised the chips' country of origin and their status as controlled products, generating approximately NT$360 million (US$11.33 million) in illicit profits.
Beginning in 2017, ADWELL Technology Inc head Chen Chien-hsiung and codefendants allegedly imported semiconductors using forged NCSIST documents, offering assurances the products would not be exported to entities subject to US sanctions. Once in Taiwan, they repackaged and relabeled the chips as Taiwanese-made and employed other methods to conceal their origin before selling them to entities in China and Hong Kong, including shell companies they established. This scheme generated approximately NT$120 million in illicit profits.
The defendants illegally exported more than 10 types of controlled chips—manufactured by Texas Instruments and Analog Devices—from the US, Philippines, Malaysia, and South Korea. These chips are applicable to military systems including radar, electronics, ultrasound systems, antenna arrays, and uncrewed military aircraft. Under export-control regulations, buyers must provide an end-user statement verifying the ultimate recipient, intended use, and destination. Manufacturers and authorized distributors typically refuse transactions involving overseas customers, including those in China.
A second scheme, allegedly led by Hygge Investment Ltd head Lai Chin-lan beginning in 2019, used similar methods to sell controlled chips certified for US military specifications to Hong Kong entities, generating approximately NT$130 million in illicit profits.
A third operation involved Hui Chung Telecommunications and ZhanKai Technology Co head Yuan Tung-tai, who allegedly placed orders through his Taiwan-based companies and submitted false declarations before shipping products to a company he established in Hong Kong. That company then resold the chips to buyers in China and Hong Kong. One chip type Yuan sold was intended for uncrewed military aircraft; prosecutors say he earned more than NT$100 million in illicit profits.
Prosecutors are seeking a 10-year prison sentence for Chen Chien-hsiung, eight years for Yuan Tung-tai, and six years for Lai Chin-lan. They are also seeking six years for Zkey Technology Inc head Chiang Kun-cheng and sentences ranging from one to three years for six other defendants: Chen Chien-hui (Chen Chien-hsiung's brother), Chen Chien-wei (former ADWELL head), Wang We-feng (Stone Engine Technology Co and WTG Technology Co head), Tsen-Tien-chi (Kplus Technology Ltd head), Tsai Yu-shu (EcoLumina Technologies Inc head), and Hung Chun-min (HGT Application Inc head).
A source familiar with the investigation revealed that the chips smuggled by Chen Chien-hsiung could be used in radar, missile guidance, uncrewed aerial vehicle flight-control, and electronic warfare systems. Despite these national security implications, the illegal trafficking of semiconductors and advanced electronic equipment—including artificial intelligence (AI) servers and dual-use chips—does not currently contravene Taiwan's National Security Act. Authorities can deter entities only when they illegally transfer military or advanced technologies to hostile foreign powers or countries subject to export restrictions.
"Taiwan urgently needs more sophisticated mechanisms that emphasize prevention rather than relying on punishment after violations have occurred," the source said.