By Jia Feimao | 2025-07-04

Just after dawn on a summer day last year, more than 30 investigators from Taiwan's Ministry of Justice Investigation Bureau (MJIB) gathered on the outskirts of Taipei and drove south to multiple locations across Taiwan's tech hub.

At exactly 7am, in a coordinated raid, they knocked on doors, raised search warrants, and entered homes and offices in unison.

The targets were not drug traffickers but eight engineers quietly working for a Chinese semiconductor firm embedded in Taiwan.

The raid was part of a sweeping crackdown last August, code named "Project 1022 Wolf Hunt," ordered under then-President Tsai Ing-wen to expose China's illegal poaching of Taiwanese chip talent through fake enterprises.

The crackdown has since continued.

In March, the MJIB launched its largest operation to date against China's illegal poaching of Taiwanese tech talent, dispatching 180 agents to raid 34 sites tied to 11 Chinese companies -- including Semiconductor Manufacturing International Corporation (SMIC), the world's third-largest chipmaker.

Authorities questioned 90 individuals over allegations that the firms used front companies to covertly recruit local engineers and funnel technology back to China, the MJIB said in a statement on March 28.

"Taiwan's high-tech industry is the backbone of our economy, with semiconductor companies and related industries serving as the country's 'National Protective Shield,'" it said.

"Consequently, Taiwan's high-tech talent has become a key target for recruitment by Chinese enterprises."

Essential workers

Taiwanese semiconductor engineers have long been seen as key to upgrading China's tech sector.

"These engineers are not only essential to building 'Chinese chips' but also represent a breakthrough point for Beijing to circumvent the US tech blockade," an MJIB investigator surnamed Su, who specializes in probing illegal recruitment by Chinese companies in Taiwan, told Focus.

This tactic has helped Chinese companies evade sanctions imposed on China's high-tech sector, as part of broader efforts to undermine Taiwan's dominance in semiconductors.

Beijing's interest in Taiwanese semiconductor talent surged after the introduction of "Made in China 2025," a Chinese industrial policy launched in 2015 to upgrade the country's manufacturing sector.

High pay remains the primary lure, with some Chinese firms offering salaries numerically equivalent to those in Taiwan -- but paid in Chinese yuan instead of Taiwanese dollars, effectively quadrupling the compensation.

Chinese firms have increasingly allowed engineers to work remotely from Taiwan, with research and development results sent directly to servers at company headquarters in China.

These firms often disguise themselves as Taiwanese companies, foreign enterprises or overseas Chinese-funded ventures to conceal their true identities.

For example, in March, Taiwan accused SMIC -- China's largest chipmaker, trailing only Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) and Samsung in annual revenue -- of using a shell company registered in Samoa in order to open a branch in Taiwan and recruit talent.

Shenzhen Torey Microelectronics allegedly bypassed regulations to set up unofficial sites, while Clounix initially registered as a "Taiwanese-capital" company before rebranding as a Singaporean firm to engage in illegal recruitment.

Most of these operations received backing from China's Integrated Circuit Industry Investment Fund -- commonly known as the "Big Fund" -- or subsidies from central and local Chinese governments. These firms are considered strategically important to Beijing's tech ambitions.

Hiring foreign engineers is often the quickest way to acquire critical technologies for Chinese firms, Paul Triolo, a partner at DGA Group, told the Wall Street Journal last November.

"Governments now care more about this," he said but noted that defining the line between legitimate hiring and illegal talent poaching "is a very difficult task and difficult to enforce."

'A foreseeable trend'

To counter the threat, Taiwan has overhauled seven laws and 14 regulations in the past four years, including a major revision of the National Security Act -- once focused solely on Chinese spies.

In December 2023, the government expanded its list of banned exports to include 10 additional "core national technologies," such as third-generation semiconductors and artificial intelligence chip design -- adding to an earlier list of 22 technologies whose leakage to hostile foreign forces is punishable by up to 12 years in prison.

The government has revised the Act Governing Relations Between the People of the Taiwan Area and the Mainland Area to tighten oversight on cross-strait talent flows and prevent technology leaks.

The government is working with the semiconductor industry to build a stronger defense network -- promoting academia-industry cooperation, trade-secret protection, counterespionage efforts and intelligence sharing with international partners.

Meanwhile, authorities are boosting awareness among engineers and offering retention incentives to preserve Taiwan's technological edge.

However, despite stricter penalties under recent legal amendments, the number of violations has not dropped -- and recruitment tactics have become more covert.

A Taiwanese investigator nicknamed "Brother Hui" told Focus that many engineers know their actions are legally questionable, and Chinese managers even coach Taiwanese employees on how to respond during law enforcement raids.

Under current laws, engineers are typically listed only as witnesses, with penalties falling on company executives.

"The two sides of the Taiwan Strait speak the same language and share cultural roots. Beijing won't stop targeting Taiwanese talent -- it's a foreseeable trend," Brother Hui said.

[Part II of II in a series on Taiwan's Tech Security Push]