(March 28): Taiwan is investigating whether China’s leading chipmaker Semiconductor Manufacturing International Corp (SMIC) illegally poached local engineers as part of an effort to access the island’s cutting-edge chip technology.

SMIC set up a branch in Taiwan posing as a Samoa-based company and tried to hire local talent, prosecutors from Taiwan’s Investigation Bureau said on Friday in a statement.

Local investigators raided 34 locations and conducted 90 interrogations this month as part of a large-scale probe into 11 Chinese tech companies including SMIC, according to the bureau, which is part of the Justice Ministry. A SMIC representative did not respond to requests for comment.

SMIC rose to global fame in 2023 when it worked with Huawei Technologies Co to produce an advanced seven-nanometre chip despite facing a myriad of US-led curbs that continue to prevent China from securing the most advanced chipmaking equipment. However, the two companies now have hit a snag with technology development as they cannot secure ASML Holding NV’s extreme ultraviolet lithography systems required to make the most cutting-edge chips.

As China faces growing restrictions on its access to advanced foreign technologies, it has aggressively tried to obtain know-how in cutting-edge segments including semiconductors by ramping up efforts to recruit engineers from Taiwan and elsewhere.

Taiwan has become a favourite talent farm for China as the two sides share the same language while the island boasts of the best chipmaking technologies in the world. Taiwan Semiconductor Manufacturing Co (TSMC) is the go-to chipmaker for Apple Inc and Nvidia Corp, producing the majority of the world’s AI accelerators. 

Taiwan does not allow Chinese companies to conduct business activities including hiring locally without formal government approval. However, there have been many cases of Chinese tech companies setting up operations in Taiwan and posing as foreign or local firms. The high pay offered by Chinese companies to lure away Taiwanese engineers has been a perennial story in local media.

The investigation bureau said it has opened over 100 investigations into Chinese companies illegally hiring Taiwanese engineers since it formed a task force for such probes in 2020.

Uploaded by Tham Yek Lee