Chips marked CN inside army training drones land a famed model-helicopter maker's founder in custody

A Taiwanese court has granted prosecutors' request to detain the founder of Align Corporation, a Taichung company best known for its T-REX remote-controlled helicopters, together with his wife, on suspicion that the firm delivered military training drones fitted with chips made in mainland China, the United Daily News reported on 29 October.

According to the report, prosecutors suspect the founder, surnamed Tu, knowingly supplied drones whose chips came from Chinese manufacturers while presenting a false country of origin to fulfil army contracts. The paper said the possible offences include breaches of Articles 11 and 12 of the National Security Act, which bar knowingly delivering goods of mainland origin for military procurement, as well as fraud. A photo caption in the report identified the Taichung District Prosecutors Office as the office handling the case.

How the chips were found

The case began with an army unit's purchase of drones intended for instruction and training. During acceptance checks, the military took the aircraft apart as a precaution and found chips printed with the letters CN, suggesting they came from China, and referred the matter to prosecutors, the newspaper reported.

A second teardown carried out during the investigation found that another batch, bought by a different army unit, also contained chips from mainland suppliers. In mid-October prosecutors directed police and investigators to search Align and other companies and summoned six people, including the founder and his wife, according to the report. Prosecutors believe at least two tenders worth a combined total of more than NT$8 million involved drones assembled and shipped by Align with Chinese-made chips. The military's tender contracts explicitly forbid products from mainland China, Hong Kong and Macau, the paper said.

Align was founded in 1984 and is based in Taichung's Fengyuan District. Its T-REX line once held as much as 70 percent of the global market for remote-controlled helicopters, and the company has long bid for drone contracts from the military, police, fire services and other government agencies, the report said. The newspaper's report did not include a response from the company.

In August, Align sent a clarification to the news site Bigmedia about an earlier report on training drones built by another contractor, in which the army was cited as saying it had cancelled the contract and imposed penalties over a Chinese chip. Align said the chip involved in that case was an STMicroelectronics product made and packaged in Taiwan and marked TWN rather than CHN.

A run of supply-chain cases

The detentions are the latest in a string of cases involving suspected Chinese components in drones sold to Taiwan's armed forces. The United Daily News noted that prosecutors in Ciaotou searched a drone company in August over aircraft allegedly built with Chinese chips and flight-control boards and delivered to the army's Eighth Corps with false origin documents, and that Taoyuan prosecutors in October secured the detention of executives at the listed firm Jiin Ming Industry over Chinese chips and camera lenses.

After the Jiin Ming detentions, Defence Minister Wellington Koo said on 13 October that the problem had arisen in small unit-level purchases of two or four drones, which had not been taken apart for inspection, while larger procurements had not been affected. He said the ministry would now require teardown inspections even for very small orders, to keep chips from what he called the red supply chain out of military equipment.

Why it matters

The Align case came to light through the same kind of hardware teardown that the defence ministry has since made mandatory for small orders, and it shows that even long-established names in Taiwan's drone industry are now under scrutiny. For a military that bars Chinese-made parts from its drones on security grounds, each new case raises questions about how contractors source components and how origin certificates are checked before aircraft reach the troops.