Taiwan’s Ministry of Justice Investigation Bureau has accused China’s largest chipmaker Semiconductor Manufacturing International Corporation of hiring Taiwanese professionals illegally.
These allegations are part of an investigation that focuses on 11 Chinese companies suspected of poaching talents from Taiwan’s semiconductor sector.
This probe highlights the growing tensions within the semiconductor industry. The competition to attract engineering talent has increased since US restrictions were placed on China’s ability to access advanced chipmaking technology.
Investigators have claimed that SMIC operated secretly a branch in Taiwan, using a Samoa based shell company as a way to hide its origins and escape regulatory oversight.
According to reports, the operation targeted highly-skilled engineers as part of an effort to boost China’s chip-making ambitions.
SMIC is linked with a shell company in Taiwan
The MJIB stated that SMIC had created a branch in Taiwan under the guise “foreign investment” using a Samoan company as a cover.
It is alleged that the firm hired local engineers to design chips, while avoiding legal requirements regarding foreign direct investments.
Taiwanese investigators began their investigations in December 2024.
In the past year, officials from the law enforcement agencies have conducted searches at 34 sites linked to 11 Chinese companies and interrogated 90 people suspected of being part of the recruitment network.
The MJIB first created a special taskforce in 2020 to investigate allegations that mainland Chinese firms were engaging in unauthorised hiring.
Chinese companies are often operating covertly. They may pose as Taiwanese or overseas Chinese enterprises, and even foreign-backed firms to avoid detection.
Some employment agencies are used to channel job offers for Taiwanese Engineers.
US Chip Restrictions Heighten the Race for Talent
China is intensifying its efforts to reduce the technology gap it has in chip manufacturing.
Since the US put SMICs on its blacklist of exports in 2020, China has become more determined to reach self-sufficiency.
The company was effectively shut out of advanced chipmaking equipment provided by ASML, an important Dutch provider of ultra violet lithography machines.
SMIC was the first to make headlines in 2023 when the company’s 7-nanometer chip, used by Huawei Mate 60 Pro smartphones, was revealed.
US officials were concerned by the product, who asked how the firm could have developed a chip when it was facing an export ban on vital equipment.
SMIC is not commenting publicly on the recent allegations by Taiwanese MJIB.
China restricts chip talent
Taiwan dominates the semiconductor industry globally.
Taiwan Semiconductor Manufacturing Company is the most technologically advanced chipmaker in the world.
TSMC manufactures chips for technology giants like Apple and Nvidia. Its technological advantage has helped Taiwan become a focal point of the global supply chains.
US moves to strengthen strategic partnership with TSMC, including encouraging TSMC’s expansion of manufacturing on American soil.
Washington also actively shields Taiwan’s semiconductor sector from Chinese acquisition and recruitment attempts in an effort to reduce dependence on Chinese technology and secure supply chains.
Taiwan is determined to protect the semiconductor industry from “illegal theft” as it has called this latest MJIB crackdown.
The size of the investigation, which included 34 searches and ninety interviews, indicates that authorities have intensified their efforts in combating foreign recruitment, which they deem harmful to national safety and industrial competition.
The ICD published the following article: Taiwan investigates 11 Chinese companies, alleges SMIC has poached SMIC engineers.
