Taiwan, Japan, and South Korea Enact Legislation to Prevent the CCP From Stealing High-Tech Secrets

A 4GB DRAM memory chip, developed by South Korea's Samsung Electronics, displayed on Feb. 8, 2001 in South Korea. (Samsung Electronics/Newsmakers)

For a long time, in addition to stealing international advanced technology through commercial espionage and international students, the communist regime (CCP) has obtained commercial secrets by bribing scientific and technological personnel of major foreign companies. To stop such theft, Taiwan, Japan, and South Korea have recently taken action and legislated protective laws.

From May 23 to 26, Taiwan’s Ministry of Justice Investigation Bureau (MJIB) launched a second wave of investigations into the CCP’s commercial espionage. In the cities of Taipei, Taoyuan, and Hsinchu, the semiconductor manufacturing powerhouse of Taiwan, a total of 10 Chinese companies or R&D bases operating illegally in Taiwan were identified and 70 people were investigated. The MJIB stated that during the investigation process, these companies were found to be suspected of violating the “People Relationship Regulations between the Taiwan Region and the China Mainland Region.” In order to evade investigation by Taiwan, many Chinese disguised themselves as Taiwanese or Hong Kong businessmen, and contacted Chinese companies through their personal offices, or entered Taiwan through third-party investment companies.

The Taipei District Prosecutor’s Office confirmed on May 26 and 27 that Chen Yushu, head of Xinhuazhang Company, and Chen Weixuan, head of Lianchuang Innovation Company, respectively, were charged with violating the above regulation. They were ordered to pay bail of NT$200,000 (about $6,900) and restricted from leaving Taiwan. In addition, when the Taipei District Prosecutor’s Office investigated related cases on May 24, it found a Hong Kong businessman, surnamed Wang, who was poaching/headhunting for Chinese technology companies in Taiwan. Wang was ordered to pay bail NT$100,000 (about $3,450).

Taiwan’s Legislative Yuan (legislature) passed an amendment of the “National Security Law” and some provisions of the “People Relationship Regulations between the Taiwan Region and the China Mainland Region” on May 20. According to relevant regulations, any person accused of economic espionage who uses any illegal means to obtain or disclose “the country’s core technology” in the future can be sentenced to 12 years in prison and receive a maximum fine of NT$100 million (about $3.45 million).

It also stipulates that any technical personnel participating in a national core project must obtain the approval of the review committee before going to mainland China, and must not provide any national Core Technology to organizations, groups, or persons controlled by hostile forces in China, Hong Kong, Macao, and abroad.

The MJIB also stated on March 9 that in the first wave of cases, a total of 11 Chinese companies that illegally poached talent in Taiwan were investigated. The MJIB also stated that high technology is the lifeblood of Taiwan’s industry and is also important to the national defense foundation and national security. In order to prevent the CCP from illegally poaching talent, Taiwanese need to be more vigilant. The investigation can also help protect the competitive advantage of Taiwan’s high-tech industry.

A senior MJIB official told Reuters in April that the Bureau had launched an investigation into more than 100 Chinese companies suspected of illegally poaching tech talent. Taiwan’s Chief Executive Su Zhenchang said in February that the CCP’s “red supply chain” has seriously infiltrated Taiwan in recent years, stealing Taiwan’s core technologies. We should accelerate Legislation process to combat these lawbreakers and reduce Taiwan’s economic and national security losses.

Japan

During the U.S.-China trade war, the United States repeatedly condemned the CCP for forcing U.S. companies located in China to hand over their technologies. The CCP has been stealing American intellectual property for a long time, causing the United States to suffer heavy losses every year. A number of Chinese high-tech companies are included in the entity blacklist of the U.S. Department of Commerce, and the export of U.S. chips and related high-tech technologies to these Chinese companies is also restricted. Most of the restricted Chinese companies have a CCP background or support, such as Huawei, SMIC, and ZTE.

In order to achieve the goal of self-produced advanced chips and technology, the CCP has spent a lot of money in the “Great Leap Forward of Chips,” and has also stepped up poaching high-tech talent. Taiwan, Japan, and South Korea are the main targets.

According to Reuters, citing Japanese officials, the Japanese government has asked colleges and universities to conduct stricter scrutiny on foreign students and scholars to prevent advanced technology being leaked to the Chinese Communist Party, to protect Japan’s national security, and to ensure the academic exchange between Japan and European and American universities. Japanese officials said that the United States arresting many Chinese scholars and students spying on behalf of the Chinese Communist Party in recent years is a wake-up call to Japan.

In order to steal advanced technology, the CCP also lures employees or former employees of technology companies to provide intelligence in various ways. According to the “Nihon Keizai Shimbun” report in 2020, in recent years, former and current employees of Japanese high-tech companies NISSHA, Fuji Seiko, OSG, etc. have been arrested one after another for leaking trade secrets to Chinese companies, and the number of cases has increased rapidly to 4 times as many as 6 years ago. In its 2020 comprehensive strategy report on China, the Japan Peace Research Institute mentioned that Japanese companies and research institutions must strengthen their management of technology and information, and at the same time strengthen security systems and personnel review systems, in order to prevent the CCP from continuing to steal the achievements of Japan’s high-tech industry.

South Korea

In South Korea, the Ministry of Trade, Industry and Energy announced a law in February to strengthen intellectual property protection in South Korea, which will be implemented in July this year. The law requires monitoring the resignation situation of foreign and Korean engineers in 12 key industries, including semiconductors, automobiles, batteries, and displays. The purpose is to prevent the CCP’s talent poaching operations that result in South Korea’s key technology falling into the hands of competitors.

According to the Korea Economic Daily, from 2018 to 2021, there were more than 400 incidents of technology leaks in South Korea, nearly 80 percent of which occurred in the electronics, semiconductor, display, shipbuilding, telecommunications, and automobile industries. At present, the South Korean government has designated semiconductors, rechargeable batteries, and biotechnology as “national strategic technologies.”

In mid-May this year, the Suwon District Prosecutor’s Office in South Korea sued two former researchers at SEMES, a subsidiary of Samsung Electronics, and two other employees of partner companies. They leaked and sold “Supercritical Cleaning Equipment Manufacturing Technology” developed by SEMES to a Chinese company in 2018.

The technology uses the supercritical state of carbon dioxide between the liquid and gaseous states to clean the semiconductor substrate, and can greatly reduce the loss of equipment and the defect rate of semiconductors.