Taiwan is breaking the mold again by taking on China’s talent spies. These spies steal sensitive technologies by lurking around foreign companies and universities to hire their employees, suck them dry, and dump them.
China’s state-sanctioned poachers and thieves are trying to get Taiwan’s crown jewels—its technology, especially computer chip technology—and will get thrown in prison and pay hefty fines of hundreds of thousands of dollars in the process.
The United States is also the victim of talent espionage, contributing to the loss of up to $600 billion annually of intellectual property theft by China for years. U.S. attempts to stop the theft have been unsuccessful so far. Thus, Taiwan’s tougher laws should be an example to us.
“Taiwan’s spy catchers have launched probes into around 100 Chinese companies suspected of illegally poaching semiconductor engineers and other tech talent, a senior official at the island’s Investigation Bureau told Reuters,” they wrote.
In addition to the 100 Chinese companies being probed, seven were prosecuted since early 2021, and 27 were raided or their owners summoned for questioning by Taiwan’s Investigation Bureau.
These are the “tip of the iceberg,” according to the official who spoke to Reuters.
“Last month the bureau 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,’” according to Lee and Wu.
In one investigation, authorities believe that a Shanghai company is operating a supposed Taiwanese data analysis firm. The Shanghai firm allegedly uses the front company to send Taiwanese chip blueprints to China, according to two officials who spoke to Reuters.
The bureau surveilled the alleged front company for almost a year, then asked the owner to come in for questioning. He is now released on bail.
Another trick that China’s front companies use is to incorporate in tax havens like the Cayman Islands, making it difficult to trace the source of their revenues from China.
Defendants from a China state-affiliated company called Tongfu Microelectronics were convicted in January, according to Reuters. The company allegedly had an illegal office with employees receiving wire payments in offshore accounts through a subsidiary based in Hong Kong.
“Beijing-based Starblaze Technology, an integrated circuit (IC) design house, has been accused of running an R&D centre in the tech hub of Hsinchu without approval,” according to Lee and Wu.
“It allegedly conducted job interviews via Zoom and used a Hong Kong company to handle payroll and insurance, according to court documents reviewed by Reuters.” The company is now standing trial.
Taiwan law bans Chinese investment in chip design and limits investment in chip packaging. Unfortunately, there are loopholes even in Taiwan, which allow Taiwanese engineers to go to China, where they are lured by wages up to three times that to be found in local markets, as well as perks like childcare, massages, and gyms, according to a Reuters source.
One such Chinese company is Semiconductor Manufacturing International Corporation (SMIC), which is trying—and so far failing—to compete against Taiwan Semiconductor Manufacturing (TSMC).
“Those willing to be poached risk not finding work again at Taiwanese tech firms as well as public shaming,” wrote the authors. “Several senior TSMC executives who went to work for SMIC in China have been branded as traitors in Taiwanese press.”
As they should, and more.
The Taiwanese government plans to increase penalties against China’s poaching, including up to three years in prison and a maximum fine of $520,525. Leaking core computer chip technology will soon breach national security law.
The laws need toughening because Taiwan’s computer chip expertise poses such a tempting target for China’s talent spies. Approximately 92 percent of the world’s advanced chip manufacturing is in Taiwan.
China is also attempting to corner global chip manufacturing through other front companies.
If China can corner the best chips, it could follow its strategy of dumping cheap but working chips onto the market to drive out other suppliers and then crank up the price to monopoly levels. With even a chip near-monopoly, Beijing could severely punish countries that rely on Chinese chips, including lack of support for China’s foreign policy and trade goals.
As American manufacturing currently depends on chips from Taiwan, China’s takeover or destruction of Taiwan’s chip industry has important economic and strategic ramifications. If China can shut down America’s access to chips, it can shut down important parts of our economy, government revenues, and the production of high-technology military equipment.
One way that China attempts to achieve this is through talent spies in the United States. China’s Thousand Talents Plan is an institutionalized form of talent espionage deployed within the United States and elsewhere to lure scientists into revealing their secrets to counterparts in China. This includes the theft of sensitive technology in exchange for lucrative contracts and high-paid jobs.
Given the hundreds of billions of dollars in intellectual property theft that America suffers annually from China, the United States and its allies should follow Taiwan’s lead in passing tougher laws against China’s talent spies.
Beijing is the world’s biggest threat to America and democracy, so we shouldn’t empower it by letting China’s companies hire away American talent and with it American technology. It will eventually be used against America itself.
