Taiwan Fights Back: Probe Launched Against SMIC Over Alleged Engineer Poaching

China's Chipmaking Giant Accused of Illegally Recruiting Talent in Taiwan Amidst Global Tech Tensions

The Ministry of Justice Investigation Bureau in Taiwan is actively investigating Semiconductor Manufacturing International Corp (SMIC, 中芯), a leading Chinese chipmaker, over allegations of illegally poaching local engineers. This investigation is part of a broader effort to prevent the unauthorized transfer of Taiwan's cutting-edge chip technology to China.

According to a statement released by prosecutors from the bureau, SMIC allegedly established a branch in Taiwan under the guise of a Samoa-based company to recruit local talent. This practice is seen as a deliberate attempt to circumvent regulations and gain access to Taiwan's highly skilled workforce.

Earlier this month, local investigators conducted raids at 34 locations and questioned 90 individuals as part of a large-scale probe targeting 11 Chinese technology companies, including SMIC. This action underscores the seriousness with which Taiwan views these potential intellectual property violations.

A representative of SMIC did not respond to requests for comment.

SMIC gained international attention in 2023 for its collaboration with Huawei Technologies Co (華為) in producing advanced 7-nanometer chips. This feat was achieved despite facing numerous restrictions imposed by the US, which aim to limit Chinese companies' access to advanced chipmaking equipment.

However, this partnership faces challenges due to the inability to secure ASML Holding NV's extreme ultraviolet lithography systems, critical for manufacturing the most advanced chips.

As China faces increasing limitations on accessing advanced foreign technologies, it has intensified its efforts to acquire expertise in key sectors, including semiconductors. This involves aggressively recruiting engineers from Taiwan and other locations worldwide.

Taiwan has become a particularly attractive target for Chinese recruitment efforts, owing to the shared language and its position as a global leader in chipmaking technology. Taiwan Semiconductor Manufacturing Co (台積電) is the go-to chipmaker for giants like Apple Inc and Nvidia Corp, producing a significant portion of the world's artificial intelligence accelerators.

Taiwanese regulations strictly prohibit Chinese companies from conducting business activities, including local hiring, without proper government approval. However, there have been numerous instances of Chinese technology companies setting up operations in Taiwan and falsely representing themselves as foreign or local entities.

Since establishing a dedicated task force in 2020, the bureau has opened over 100 investigations into Chinese companies suspected of illegally recruiting Taiwanese engineers. This proactive approach reflects Taiwan's commitment to protecting its technological assets and intellectual property.