This figure is in addition to seven prosecutions initiated since the start of last year and includes 27 businesses that have been raided or whose owners have been summoned for questioning by the office, the official said.
Home to industrial giant TSMC and home to 92% of the world’s most advanced semiconductor manufacturing capacity, Taiwan has what China needs – chip expertise in spades.
A global chip shortage and Beijing’s avowed goal of achieving self-sufficiency in advanced chips – promoted more forcefully by Chinese President Xi Jinping after a trade war with the former Trump administration – have not that intensify the street towards the talents of engineers.
Taiwan responded by establishing a task force within the Justice Ministry’s Bureau of Investigation – its main spy-catching organization – in December 2020 to tackle poaching.
The cases where she took action through raids or interrogations represent “the tip of the iceberg”, said the official, who asked to remain anonymous so as not to hamper investigations.
The Bureau of Investigation said the official’s comments represented his point of view.
Increased military pressure from China, which claims Taiwan as its territory, has only strengthened Taipei’s determination to protect its chip supremacy – an asset that is also of strategic importance to the United States since a large part of its chip manufacturing is outsourced to the island.
Last month, the bureau carried out its biggest operation yet – a raid on eight companies aimed at countering what it said was “the Chinese Communist Party’s illegal activities in talent poaching and theft of secrets”.
China’s Taiwan Affairs Office did not respond to a Reuters request for comment.
TRICKS USED
It is not per se illegal for Chinese companies to hire Taiwanese engineers. However, Taiwanese law prohibits Chinese investment in certain parts of the semiconductor supply chain, including chip design, and requires reviews for other areas such as chip packaging, making it very difficult for Chinese chip companies to operate legally on the island.
Taiwanese engineers are also free to travel to China, but many prefer the quality of life on the island, especially when COVID-19 restrictions make travel more difficult.
One of the cases under investigation involves a company that poses as a Taiwanese data analytics company but which authorities say is a branch of a Shanghai-based chip company that sends plans chip design in China, according to the official and another colleague who spoke to Reuters.
in mid-March, after nearly a year of surveillance, the bureau summoned the owner of the company for questioning. The owner has since been released on bail, they said, declining to identify the company as charges have not yet been filed.
Other tricks used include setting up units in tax havens such as the Camans, which makes it more difficult to identify inflows of money from China.
Starblaze Technology, a Beijing-based integrated circuit (IC) design firm, was accused of running an R&D center in the Hsinchu Technology Center without permission. She allegedly conducted job interviews via Zoom and used a Hong Kong company to handle salaries and insurance, according to court documents reviewed by Reuters. The trial is in progress.
Tongfu Microelectronics, a Chinese state-affiliated company, was accused of having an illegal office whose employees received salaries in US dollars in wire-transferred offshore accounts through a Hong Kong-based subsidiary. The defendants were found guilty in January.
Starblaze and Tongfu did not respond to Reuters requests for comment.
MOST WANTED
Lucy Chen, vice president of Taipei-based Isaiah Research, says that last year Chinese microchip companies courted by offering wages two to three times higher at local levels. Among the most sought-after employees are integrated circuit designers, who can work remotely.
While it’s hard to compete on pay, local businesses aim to offer more secure, long-term career development and perks like on-site daycare, massage and gyms, a senior executive said. Hsinchu chip company, refusing to be identified.
Those who accept being poached risk not finding work in Taiwanese technology companies and facing public shame. Several senior TSMC executives who went to work for SMIC in China have been branded traitors in the Taiwanese press.
The authorities are also trying to increase penalties for poaching. Maximum prison terms should be increased from one year to three years and maximum fines to $5,200,520,525.
In a related move, the government has proposed making the leakage of core chip technologies a violation of national security law.
But some fear tougher rules could hamper President Tsai Ing-wen’s drive to build a supply chain from materials to chipmaking.
“What if we discourage legitimate foreign investors and damage our national economy through overly strict regulation?” said the senior official of the Bureau of Investigation.
($1 = 28.6090 Taiwan dollars)