Taiwan prosecutes semiconductor recruiters accused of illegally poaching talent for Chinese company

Masha Borak
·4-min read

Taiwanese authorities have raided the offices of two companies that allegedly broke the law in poaching local chip talent for a mainland Chinese artificial intelligence (AI) chip maker, accusing the headhunters of undermining the local semiconductor industry.

The raid hit offices of WiseCore Technology and IC Link, recruitment companies that have headhunted hundreds of chip experts over the past three years through a joint venture with a mainland Chinese chip maker, the prosecutors’ office in New Taipei district said on Tuesday.

A total of 19 people were brought in for questioning for allegedly breaching the Act Governing Relations Between the People of the Taiwan Area and the Mainland Area, a law designed to protect the interests of the self-ruled island, including those of its hi-tech industry. The individuals are being questioned for breaking rules that govern mainland investment into Taiwan’s chip industry, which requires permission from Taiwan’s Investment Commission.

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The semiconductor industry is now the pillar of Taiwan’s economy, contributing 15 per cent of total GDP in 2020, while it is a weak link in mainland China’s hi-tech supply chain. China’s chipmaking champion, Semiconductor Manufacturing International Corp (SMIC), has poached engineering staff from Taiwan over the years, and SMIC’s co-chief executive Liang Mong Song and vice-chairman Chiang Shang-yi are both former executives from Taiwan’s biggest chipmaker TSMC.

The world is dangerously dependent on Taiwan for semiconductors

“In view of the fact that mainland China is actively attracting Taiwan’s semiconductor talent with high salaries, hi-tech talent and technology protection have become an important issue of national economic policy,” the the Taipei district prosecutor’s office said in its statement, adding that the Ministry of Justice aims to strengthen investigations into relevant cases.

Cross-strait relations have worsened recently, both in the political and economic arenas, and the latest move by Taipei could be seen as a warning shot to Beijing as it seeks a short cut to achieve its own semiconductor ambitions.

China is aware of the importance of local talent cultivation, but the “fastest way to achieve self-reliance” in its domestic supply chain is to “vigorously poach talented people from Taiwan”, said Arisa Liu, research fellow at the Taiwan Institute of Economic Research.

“Mainland China has the state-backed China Integrated Circuit Industry Investment Fund, and plenty of private investment funds,” she said. “Taiwan must be prepared, especially at a time when the supply chain is undergoing a restructuring amid the US-China technology rivalry.”

‘Made in China 2025’: How Beijing is boosting its semiconductor industry

In August last year, when China’s Ministry of Science and Technology offered to sponsor visits by 10 Taiwanese scientists as part of an exchange programme, the Taiwanese Mainland Affairs Council described the effort as a tactic to incorporate Taiwan under Beijing. The office warned against China’s efforts to recruit Taiwanese talent into industries of strategic importance.

In the same month, Taiwan’s Ministry of Economic Affairs announced it would tighten screening of local chip makers and other tech companies investing in mainland China.

The name of the mainland Chinese AI chip company involved in the illegal recruitment was not disclosed by Taipei prosecutors but Nikkei Asia reported that Bitmain Technologies.

Beijing-based Bitmain is one of the world’s largest producers of cryptocurrency mining equipment. Founded by Jihan Wu and Micree Zhan, the privately-owned company started developing AI chips in 2017. In 2018, the crypto giant attempted an initial public offering in Hong Kong but let its application lapse in 2019.

Bitmain did not immediately respond to a request for comment.

The two recruitment firms under investigation offered to more than double the salary of semiconductor talent from Taiwan companies such as MediaTek and MStar, if they took up similar jobs in mainland China.

“We have seen the trend of recruiting talent from Taiwan’s semiconductor industry over the past few years,” said Eric Tseng, chief executive of Taipei-based research firm Isaiah Research. Senior executives and engineers would “easily be important hiring targets of Chinese companies” due to their high competence and Chinese linguistic advantages, he added.

‘Made in China 2025’: how new technologies could help Beijing achieve its dream of becoming a semiconductor giant

China’s chip-making drive has been motivated in part by its industrial upgrade blueprint known as Made in China 2025 as well as a push to reduce reliance on foreign semiconductor supplies as tensions between the US and China continue.

Additional reporting by Che Pan

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