8 Chinese Firms in Taiwan Suspected of Stealing Technology, Talent Poaching

The Chinese and Taiwanese printed flags, on April 28, 2022. (Dado Ruvic/Reuters)

Eight Chinese tech companies in Taiwan suspected of stealing technology and poaching local workers, particularly those with expertise in high-tech, have been raided by the Ministry of Justice Investigation Bureau (MJIB).

The MJIB sent 112 officers to conduct raids on the eight companies located in 25 locations from May 22 to May 25 and arrested 49 individuals for questioning, according to Taiwan News.

The companies mainly specialize in database management, chip design, and semiconductors. They allegedly set up offices in Taiwan under the guise of firms backed by foreign or Taiwanese investors while illegally hiring Taiwanese IT staff.

The MJIB said that Taiwanese engineers were lured by high salaries and allegedly asked to hand over “business secrets” from their previous companies.

The bureau said it would continue to crack down on illegal talent poaching, which could impact Taiwan’s competitiveness in the high-tech industry.

Taiwan possesses the chip expertise China requires, given the Taiwan Semiconductor Manufacturing Corporation’s (TSMC) dominance in the industry, which accounts for over 90 percent of the world’s advanced semiconductor manufacturing capacity.

A factory of Taiwanese semiconductors manufacturer TSMC at Central Taiwan Science Park in Taichung, Taiwan, on March 25, 2021. (Sam Yeh/AFP via Getty Images)

Last year, an MJIB official told Reuters that Taiwan had launched probes into 100 Chinese companies over allegations of poaching semiconductor engineers and other tech talents.

The official said the cases in which Taiwan has taken action through raids or questioning represented only “the tip of the iceberg,” implying that there may be a much larger number of similar cases.

Taiwan authorities had proposed to increase penalties to tackle talent poaching, which includes increasing the jail sentences from one year to three years and raising the maximum fines from $5,200 to $520,525.

US Reliant on Taiwan’s Semiconductor

Beijing views Taiwan as part of its territory despite Taiwan being a self-governing country with a democratically elected government. The increased military pressure by Beijing has prompted Taiwan to protect its chip supremacy—an asset strategically important to the United States, as much of its chip manufacturing is outsourced to the island.

The United States last year imposed sweeping restrictions on access to chipmaking technology to impede China’s technological and military advances. Taiwan’s Economy Ministry had also pledged to comply with the U.S. export controls.

Advanced semiconductor chips are used to make everything from pickup trucks to hypersonic missiles. Currently, more than 60 percent of the world’s supply of chips is produced in Taiwan, many of them with the help of U.S. research and design.

Bloomberg reported last year that the United States “would consider evacuating Taiwan’s highly skilled chip engineers” in the worst case if China invades Taiwan, citing people familiar with the Biden administration’s deliberations.

In response, Taiwan’s Ministry of Economic Affairs said the international community must understand that its economy is heavily intertwined with the world’s economy, including China’s. And that for the world, peace and security in the Taiwan Strait are in all parties’ best interests.

The ministry added that instability in the Taiwan Strait would inevitably endanger the security of the Asia-Pacific region, especially Japan and South Korea, which are also part of the critical semiconductor supply chains.

Rita Huang, Andrew Thornebrooke, and Reuters contributed to this report.