HTC shares plummeted after it was revealed three design executives had been arrested on suspicion of leaking trade secrets.
This is the latest in a long list of woes for the company which has seen senior staff departures and disappointing sales.
According to the Bangkok Post, HTC vice president of product design Thomas Chien, research and development director Wu Chien-Hung and senior manager of design and innovation Justin Huang were arrested on Friday.
Chien and Chien-Hung remain in custody, while Huang has been bailed.
They also face charges of making false commission fee claims of more than $334,200. So far there is no information on what that charge is about.
HTC said the investigation had no impact on its operations. Chien and Chien-Hung could not be reached and Huang was not immediately available to comment.
It looks like the executives were planning to use stolen new interface technology to set up a new mobile design company aiming at Chinese vendors. Shares dropped 6.4 percent on the back of the news.
HTC has been troubled by internal feuding and executive exits as its high priced smartphones are unable to compete in a saturated market, despite good reviews. HTC has seen its market share slump to below five percent from around one quarter five years ago.