TAIPEI, Taiwan—Two company executives are facing national security charges after allegedly using Chinese components to fulfill a military drone contract.
The Ciaotou District Prosecutors Office in southern Taiwan’s Kaohsiung City announced on Aug. 18 a case against a technology company executive surnamed Chang and a technology director surnamed Lo at another Taiwan-based technology company.
The case marked the first of its kind in Taiwan, prosecutors said.
Prosecutors launched a probe after the Army’s 8th Field Army flagged suspected Chinese parts during an acceptance inspection of the drones.
Chang and Lo “allegedly procured China-packaged drone chips and Chinese-made flight control boards to assemble drones, while concealing product markings and submitting falsified certificates of origin,” prosecutors stated.
According to Taiwan’s national broadcaster, Radio Taiwan International, Chang’s company was awarded the contract worth 2.95 million New Taiwan dollars (about $92,500) in 2025.
On Aug. 11, Taiwanese investigators searched multiple locations, including the two companies, and seized evidence.
Following the investigation, prosecutors summoned Chang, Lo, and others involved, then sought court orders for the pair’s detention, alleging violations of the National Security Act and fraud under the Criminal Code. The court subsequently ordered Chang to be held incommunicado, while Lo was released.
Kuo Ching-tung, Ciaotou’s chief prosecutor, stated that his office will continue to coordinate with military authorities within its jurisdiction to actively investigate related illicit activities and uphold national security.
In response, the 8th Field Army said in a statement on Aug. 18 that it had withheld payment under the contract and pursued breach-of-contract claims, according to Taiwan’s national media outlet Military News Agency.
The 8th Field Army emphasized that defense procurement is vital to national security and combat readiness, and that vendors must strictly comply with contracts and relevant laws.
It added that it was fully cooperating with the investigation and would continue to coordinate closely with investigators to ensure the quality control of military equipment and protect national security.
“Our military will also continue to strictly enforce quality control for the subsequent procurement of equipment in accordance with the law, ensuring we obtain the equipment we need on time and to the required standards,” Major General Chiao Fu-chun, deputy spokesperson for Taiwan’s Ministry of National Defense, told reporters on Aug. 20.
On Aug. 5, Taiwanese President Lai Ching-te said Taiwan aims to become the “Asian hub of global drone development” while building drone supply chains independent of China, during a meeting with a Brookings Institution delegation.
“The government has therefore invested heavily in plans to advance industrial development, and we have proposed a special defense budget to procure unmanned vehicles and establish drone defense systems,” Lai said, according to a translation of his remarks by the Presidential Office.
“We look forward to Taiwan and the U.S working together to build non-red drone supply chains, promote mutual industrial development, and contribute to global peace and stability.”
On Aug. 14, Taiwan’s opposition-controlled legislature passed this year’s government budget after a record 266-day delay, according to Taiwan’s national media, Central News Agency.
Legislators voted to reduce the originally proposed spending of 3.04 trillion New Taiwan dollars (about $95 billion) by 48 billion New Taiwan dollars (about $1.5 billion), but a 63.4 billion New Taiwan dollar (about $2 billion) budget for drone industry development and procurement passed without cuts.
