Taiwanese prosecutors have indicted ten people accused of smuggling US military-grade chips to China and Hong Kong, with some parts allegedly routed to missile and radar programs. The defendants are former employees and trading partners of three Taiwan distributors for Analog Devices and Texas Instruments, two large US makers of analog and mixed-signal chips. Prosecutors say the group used forged orders in the name of the National Chung-Shan Institute of Science and Technology, or NCSIST, as well as the names of other Taiwanese companies, to make the chips appear destined for use in Taiwan. The distributors themselves were duped, according to prosecutors.
The chips appear on Taiwan's strategic high-tech commodities list and cannot be shipped to China, Hong Kong or Macau under US Commerce Department rules. Buyers must provide an end-user statement before a manufacturer ships. The equipment cited in the case includes radar receivers, electronic reconnaissance gear, jammers, ultrasound devices, communications equipment and antenna arrays. The orders carried written statements that prosecutors say were false, promising no export or re-export to US-sanctioned parties, accepting the binding nature of US export regulations, and acknowledging that end-user declarations are required for sales outside Taiwan.
The parts were manufactured in the US, Thailand, the Philippines and South Korea, with no processing in Taiwan that would have changed their country of origin. They were declared Made in Taiwan to fool customs officials, prosecutors say. The buyers included Hong Kong companies and firms effectively controlled from mainland China, and the defendants profited from the scheme. The three main groups of defendants made more than NT$92.75 million, NT$135.83 million and NT$108.11 million, while four others earned from several hundred thousand to NT$6.41 million.
The charges include fraud, forgery and offenses under the Money Laundering Control Act, with prosecutors seeking two to ten years for each defendant. Prosecutors also asked the court to confiscate anything gained from the plot. They argue heavy sentences are warranted because the trafficked products are military components that seriously harm Taiwan's national security and could instill distrust of Taiwan in the US. No court date has been announced, and the trial is expected to take place in the New Taipei District Court. Neither Analog Devices nor Texas Instruments has a comment on record about the case.
The case is not Taiwan's only recent entanglement with diverted chips. Texas Instruments parts were previously found in Russian weapons in 2024, when third parties bought them for Russia's military. Earlier this year, Supermicro co-founder Yih-Shyan "Wally" Liaw was charged in the US over diverting servers with Nvidia chips to China and has pleaded not guilty. In a separate Taiwanese case, Keelung prosecutors seized 50 Supermicro servers and detained three people, and nine people were ultimately indicted in August, including an Nvidia Taiwan manager and two Supermicro Taiwan staff members. Eight of them were charged with breach of trust and document forgery.
The chips in the new case are not AI accelerators but radar and RF parts with practical military applications. The charges likely fall under fraud and forgery because violating US export control laws is not a crime in Taiwan. Taiwan's own Foreign Trade Act carries prison terms for exporting listed high-tech goods to controlled areas without a permit, though China counts as only one of 12 kinds of chipmaking equipment. A 2019 amendment raised fines for false origin labeling and illegal high-tech exports to protect the Made in Taiwan brand. Taiwan's economy ministry promised earlier this year to amend the Foreign Trade Act again to tighten controls on AI chip exports to China, with advocates wanting China added as a controlled region.
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