Sat, Apr 09, 2022 page3

• IN FOCUS: Probes launched into 100 Chinese chip firms for poaching and design theft

  • By Yimou Lee and Sarah Wu / Reuters, Taipei
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  Taiwan’s spy catchers have launched probes into approximately 100 Chinese companies suspected of illegally poaching semiconductor engineers along with chip designs, a senior official at the Investigation Bureau said.

  That is on top of seven firms prosecuted since the start of last year and 27 that have either been raided or whose owners have been been questioned by the bureau, the official said.

  Home to industry giant Taiwan Semiconductor Manufacturing Co (TSMC) and accounting for 92 percent of the world’s most advanced chip manufacturing capacity, Taiwan has the expertise China needs.

  

  Two semiconductor chips are displayed at the Taiwan Semiconductor Research Institute in Hsinchu on Feb 11.

  Photo: Reuters

  A global chip shortage and Beijing’s avowed goal to achieve self-reliance in advanced semiconductors has only intensified the scramble for engineering talent.

  Taiwan in 2020 responded with the creation in of a task force within the Ministry of Justice’s Investigation Bureau — its main spy-catching organization — to tackle poaching.

  Cases in which it has taken action with raids or interrogation are “the tip of the iceberg,” the official said, asking to remain anonymous.

  The bureau said the official’s comments represented its views.

  Heightened military pressure from China has only strengthened Taipei’s determination to protect its semiconductor supremacy — an asset also strategically important to the US, as much of its chips are manufactured in Taiwan.

  The bureau last month conducted its biggest operation to date — a raid of eight companies aimed at countering what it said was “the Chinese Communist Party’s illegal activities of talent-poaching and secret-stealing.”

  It is not illegal for Chinese firms to hire Taiwanese engineers. However, Taiwanese law prohibits Chinese investment in some parts of the semiconductor supply chain, including chip design, making it difficult for Chinese chip firms to operate legally in Taiwan.

  One case involves a firm that purports to be a Taiwanese data analysis company, but which authorities believe is an arm of a Shanghai-based chip firm sending design blueprints to China, the official and one other said.

  After nearly a year of surveillance, the bureau last month summoned the firm’s owner for questioning. The owner has been released on bail, they said, declining to identify the company.

  Other tricks include incorporating units in tax havens such as the Cayman Islands, making it harder to identify money inflows from China.

  Beijing-based Starblaze Technology, an integrated circuit design house, has been accused of running a research and development center in Hsinchu without approval. Tongfu Microelectronics, a Chinese state-affiliated company, was accused of having an illegal office whose employees received salaries in US dollars in offshore accounts. The defendants were found guilty in January.

  Lucy Chen, vice president of Taipei-based Isaiah Research, said that Chinese chip firms last year lured Taiwanese with salary offers two to three times local levels. Among the most sought-after are integrated circuit designers, who can work remotely.

  While it is difficult to compete on salary, local firms aim to provide more secure, long-term career development, along with perks such daycare centers and gyms on site, a Hsinchu-based executive said anonymously.

  Those willing to be poached risk not finding work again in Taiwan, as well as public shaming. Several senior TSMC executives who went to work for China’s Semiconductor Manufacturing International Co have been branded as traitors in Taiwanese media.

  Authorities are also working to increase penalties for poaching. Maximum prison sentences are set to be increased to three years with fines up to US$520,525.

  The government has also proposed making the leaking of core chip technologies a breach of national security regulations.

  There are concerns that tougher rules might hinder President Tsai Ing-wen’s (蔡英文) drive to expand Taiwan’s supply chain.

  “What if we put off legitimate foreign investors and damage our national economy due to overly strict regulation?” a senior Investigation Bureau official asked.
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