Taiwanese chipmaker United Microelectronics Corp (UMC) in September was indicted under the US Economic Espionage Act for alleged theft and use of trade secrets from US firm Micron Technology Inc.
As the case involves UMC’s collaboration with China’s Jin Hua Integrated Circuit Co — which counts China’s Fujian Province as a stakeholder — UMC might also have breached the National Security Act (國家安全法).
The government should conduct a thorough investigation.
According to Article 5-1 of the act, “any person who intends to endanger national security or social stability and commits an offense specified in Article 2-1 shall be sentenced to imprisonment for a term of not more than five years, or short-term imprisonment; in addition thereto, a fine of not more than NT$1 million [US$32,455] may be imposed.”
Article 2-1 of the act states: “People are prohibited from ... developing an organization for official use of a foreign country or mainland China, for its militaries, party duties, or other official organizations, or the institutions established and specified by the foresaid organizations, or the civil groups entrusted by the foresaid organizations.”
By collaborating with Jin Hua, which was established by the Fujian provincial government, and by recruiting engineering staff, UMC’s actions might be deemed to constitute “developing an organization” in China.
If the goal of developing the organization was to steal commercial secrets, this would have caused damage to normal business operations and therefore could be deemed to have “endangered social stability.” In that case, Article 5-1 of the act would come into play.
President Tsai Ing-wen (蔡英文) and her administration’s industrial policy do not pay enough attention to the protection of intellectual property (IP) rights. The government should use the UMC case as justification to launch criminal prosecution to establish a legal precedent that would make it illegal for Taiwanese companies to engage in any activity that would help China conduct industrial espionage. This would also help to keep Beijing’s “united front” tactics in check and ensure that any Taiwanese interacting with Chinese organizations remain vigilant.
Siliconware Precision Industries chairman Bough Lin (林文伯) has complained to the media that when Micron established a wafer packaging company, it engaged in similar activity by head-hunting staff from other companies, yet the government did not seek to punish it.
However, this is a false comparison: Headhunting is not the same as stealing commercial secrets.
In a normal headhunting scenario, employees are not asked to steal information from the companies they are leaving. This is quite different from what happened in the UMC case.
Moreover, the criminal behavior alleged to have been undertaken by UMC took place in 2015 and 2016, and was not linked to the US-China trade dispute.
Therefore, it should be treated as a normal economic crime.
Chinese economic espionage is nothing new, although the UMC case is the first time that Beijing has used a Taiwanese company to do its dirty work.
The Tsai administration must take action to maintain a healthy investment environment for Taiwan’s tech sector, and it must stop turning a blind eye to the pilfering of research and technical achievements.
Chen Ping-hsun is an adjunct professor at Chengchi University’s Graduate Institute of Technology.
Translated by Edward Jones
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