Taiwanese prosecutors have charged ten people with faking government paperwork to buy restricted US military-grade chips and resell them to China — bad news for Taiwan's standing with Washington, and a sign of how leaky export controls still are.

• A group led by a former chip distributor forged seals and documents from Taiwan's state defense research institute to pose as an approved buyer.
• That let them buy tightly controlled chips from Texas Instruments and Analog Devices — parts used in radar receivers, electronic surveillance and jammers.
• The chips were imported into Taiwan, then shipped on to Hong Kong firms controlled from China, where they went into missiles and military radar.
• To dodge customs, the group repackaged chips made in the Philippines, South Korea and Singapore and falsely stamped them "Made in Taiwan."
• Profits topped NT$3 billion; prosecutors are seeking ten years for the ringleader and one to eight years for the rest.

Outlook: Expect tighter end-user checks on Taiwanese chip buyers and more pressure from Washington, which may now question how well Taiwan polices re-exports to China.