Identified by his family name Hau, the major allegedly sold information obtained from an E-2K early warning aircraft to China for an unspecified amount of money, the United Daily News cited prosecutors as saying.
The information related to Taiwan's land and air intelligence.
Prosecutors have stepped up their investigation and suspect the involvement of up to 20 people in the case, the report said, without indicating whether they were civilians or military personnel.
Taiwan has been rocked by several spying scandals in recent years, reflecting the fact that intelligence gathering has continued despite warming ties with China.
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Although they split in 1949 at the end of a civil war, Beijing still regards the island as part of its territory awaiting reunification, by force if necessary.
In February, a former Taiwanese air force lieutenant colonel received 12 life sentences for spying for China for a reported payment of USD 269,000.
In 2011, an army general and chief of an intelligence unit was sentenced to life for spying for China in one of the island's biggest espionage cases.