Taiwanese prosecutors have indicted 10 company leaders and requested sentences of 2 to 10 years each for smuggling U.S. military-grade chips from Texas Instruments and Analog Devices to China, using forged orders in the name of Taiwan's own defense research institute. The United Daily News first reported the indictments.

Investigators believe the chips reached Chinese research units building missiles and military radar. Three main defendant groups earned NT$92.75 million, NT$135.83 million, and NT$108.11 million from the scheme, prosecutors said. Four others took between several hundred thousand and NT$6.41 million.

How did the scheme work?

The parts sit on Taiwan's strategic high-tech commodities list, and the U.S. Commerce Department bans shipments of them to China, Hong Kong, and Macau. Buyers must provide an end-user statement before a manufacturer ships.

Former employees and trading partners of three Taiwan distributors for ADI and TI placed orders through their own companies, prosecutors allege. The orders used either the name of the National Chung-Shan Institute of Science and Technology (NCSIST) or other Taiwanese companies to claim domestic use.

Each order carried written statements promising:

• no export or re-export to U.S.-sanctioned parties
• acceptance of U.S. export regulations
• accurate end-user declarations required for sales outside Taiwan

Prosecutors say those statements were false and that the distributors themselves were duped.

Why did customs let the chips through?

The chips were manufactured in the U.S., Thailand, the Philippines, and South Korea, with no processing in Taiwan that would change their country of origin. Defendants nevertheless declared them "Made in Taiwan" to fool customs officials, according to the indictment. Buyers included Hong Kong companies or firms effectively controlled from mainland China.

The equipment involved reportedly covered radar receivers, electronic reconnaissance gear, jammers, ultrasound devices, communications equipment, and antenna arrays.

What are the charges?

Prosecutors charged the defendants with fraud, forgery, and offenses under the Money Laundering Control Act, and asked the court to confiscate all proceeds. They argue heavy sentences are warranted because the trafficked military components seriously harm Taiwan's national security and could make the U.S. distrust Taiwan.

The trial would take place in the New Taipei District Court, but no court date has been announced. Neither ADI nor TI has commented on record.

Breaking U.S. export control law is not itself a crime in Taiwan, which explains why the charges center on fraud and forgery. Taiwan's Foreign Trade Act does carry prison terms for exporting listed high-tech goods to controlled areas without a permit, but China counts as one of only 12 controlled destinations for chipmaking equipment. A 2019 amendment raised fines for false origin labeling and illegal high-tech exports to protect the "Made in Taiwan" brand.

Is this an isolated case?

No. TI parts surfaced in Russian weapons in 2024 after third parties bought them for Russia's military. Earlier this year, U.S. authorities charged Supermicro co-founder Yih-Shyan "Wally" Liaw over diverting servers with Nvidia chips to China; he has pleaded not guilty.

In a separate Taiwanese case, Keelung prosecutors seized 50 Supermicro servers and detained three people. Nine were indicted in August, including an Nvidia Taiwan manager and two Supermicro Taiwan staff. Eight of them face breach of trust and document forgery charges.

What happens next?

Taiwan's economy ministry promised earlier this year to amend the Foreign Trade Act again to tighten controls on AI chip exports to China. Amendment advocates want China added as a controlled region, arguing current rules fall short of Taiwan's trade cooperation agreements with the U.S.

The chips at issue here are not AI accelerators but radar and RF parts with direct military applications — a fact that puts the case at the intersection of U.S. export enforcement and Taiwan's own export control reform debate.