Taipei, Taiwan – Taiwan is stepping up efforts to protect what may be the island’s most important resource: executives and semiconductor engineers that Taipei believes are being poached by China.
Earlier this year, Taiwan’s cabinet proposed strengthening the country’s National Security Act to impose harsher sentences on crimes including “expropriation of extra-territorial trade secrets” and spying. economic message. Under the proposed amendments, these charges could soon carry prison sentences of up to 10 and 12 years, and fines between $1 million and $3.5 million.
The proposals also target Chinese companies that circumvent investment and recruitment restrictions, two common methods of acquiring Taiwanese technology and experience. Taiwanese companies that act as fronts for Chinese companies will face fines of up to $860,000, while Chinese companies operating in Taiwan without authorization could face fines of up to 500,000 USD and face three years in prison.
Taiwan Semiconductor Manufacturing Company, better known as TSMC, makes just over half of the world’s semiconductors, which are key components of everything from smartphones to smartphones. and medical equipment to cars and fighter planes. The industry, which was recently described by Prime Minister Su Tseng-chang as a “salvage” for Taiwan, has been infiltrated by China’s “red supply chain”.
Nick Marro, China, Taiwan and Macau analyst at the Economist Intelligence Unit, told Al Jazeera: “The reason it is so important to Taiwan is that it leads to concerns about the leakage of some intellectual property. wisdom is very important. “There is a huge fear that if these top engineers are lured to China, they will bring some trade secrets with them and that could hurt the competitiveness of the Taiwanese economy. Loan.”
Brain drain to China
Despite its success in advanced manufacturing, Taiwan has long struggled with a brain drain to neighboring China, where students and professionals have access to scholarships, salaries and benefits. benefits are better than the island, where wages have largely stagnated over the past 20 years.
While the problem is not new, the stakes are getting higher and higher as Taiwan’s semiconductor industry becomes too important to the economy and Beijing increases pressure on the self-ruled island. where the Chinese Communist Party considers a breakaway province in need of reunification. forced if necessary.
Eric Yi-hung Chiou, an associate professor of international relations at National Yang Ming Chiao Tung University in Taipei, said that by 2020, semiconductors will account for 35 percent of Taiwan’s exports, compared with 18 percent of Taiwan’s exports. a decade ago.
Meanwhile, talent poaching has been successful as China tries to develop its indigenous tech industry as part of its “Make in China” initiative, according to Marro, while also providing Beijing with another means of isolating Taiwan.
“They are attracting a lot of Taiwanese talent and developing their own industries in ways that are undermining the Taiwanese economy, and they are doing this without bringing in ships or boats,” said Marro. Taiwan’s territorial space,” said Marro.
Taiwan’s efforts to cut back on Chinese recruitment have pushed recruitment and investment efforts into the “shadow,” he said, leading to more illegal activities.
Two recent cases listed on the website of the prosecutor’s office in Hsinchu, the unofficial capital of Taiwan’s semiconductor industry, detail how the two Chinese companies are believed to be companies. Taiwan to get research on chip design and then send information to China.
China’s Taiwan Affairs Office has denied any suggestion of wrongdoing.
“Recently, they have deliberately smeared and threatened mainland companies in Taiwan, further escalating cross-strait confrontation and causing trouble,” spokesman Ma Xiaoguang said at a press conference on Thursday. last month.
“Such political manipulation cannot hinder the general trend of exchanges and cooperation between people on both sides of the strait, and will only harm the vital interests of Taiwan’s business community and compatriots across the strait.” island.”
“Spy catcher” sent out
In 2020, the Department of Justice’s Investigative Bureau – often referred to as Taiwan’s “spy catchers” – set up a task force to investigate illegal recruitment and investment practices, since last year has included recruiters advertising jobs in Chinese companies. In March, Taiwanese authorities raided eight companies in a mass crackdown in multiple cities, with one government official telling Reuters that as many as 100 companies were being investigated for investment and hunting. illegal talent theft.
According to Mark Ho, a People’s Democratic Party lawmaker who sits on the parliament’s foreign and defense committees, the government was slow to act until recently due to political concerns. The previous administration of Ma Ying-jeou, who served as president from 2008 to 2016, had much closer ties with China, where many Taiwanese companies, including iPhone supplier Foxconn, do business. .
China is also Taiwan’s largest trading partner despite its ongoing sovereignty dispute.
Taipei’s tough stance also comes as businesses from the United States and the European Union grapple with the rising costs associated with doing business in China, from forced technology transfers to China. to “no COVID” related supply chain disruptions.
“It’s like the Ukraine war, you can’t do it alone,” Ho told Al Jazeera. “But since the US, Japan, Korea and other countries, even the EU, are dealing with issues like patents, like core technology, brain drain, these are issues that both the world needs to face, so the timing is right.”
Talent poaching is politically complicated not only because it pits Taiwan against China, but also Taiwanese citizens against a government and industry that cannot offer the existing form of compensation. on the strait.
Liang Mong-song, a former TSMC executive turned co-CEO of China Semiconductor Manufacturing Corporation (SMIC), receives a salary of $1.53 million in 2020 and perks including company shares and an apartment, according to a report in the South China Morning Post. Lower-level executives and engineers can expect salaries three to five times higher than in Taiwan, where the average annual salary for a TSMC employee is around $65,000, said an analyst. told Al Jazeera, speaking on condition of anonymity.
However, lower wages are reflected in the competitive pricing of Taiwan’s semiconductor industry, which can produce high-end technology at lower prices than countries like the US. TSMC co-founder Morris Chang recently told a Brookings Institution podcast that the cost of making chips in Taiwan is about half the price of the Oregon plant that opened in 1997.
Chien-huei Wu, a research fellow at Academia Sinica’s Institute for European and American Studies, said the US trade war restrictions on technology exports to China combined with the consequences of the US trade war. The pandemic has helped reverse the brain drain – even if only temporarily. – as sanctions policies.
“Like 10 years ago, China has recruited a lot of engineers, especially senior engineers, but these people have come back in the last two years,” Wu told Al Jazeera, adding: added that many overseas Taiwanese find their advancement possibilities limited. due to doubts about their loyalty.
Taiwan’s handling of COVID-19 has also made many engineers a more desirable location to wait out the pandemic than China, where lockdowns continue even in international cities like Shanghai.
TSMC goes West and goes to Japan
Taiwan’s semiconductor industry is also facing an emerging challenge from friendlier nations such as the US, Japan and South Korea after a global chip shortage last year caught the world’s attention. about the island’s reliance on supplies. In particular, the US has expressed concern about its excessive compliance with Japan, South Korea and Taiwan, and is currently seeking to enter some areas of semiconductor manufacturing.
Last year, TSMC began construction of a $12 billion plant in Arizona and announced a new plant in Japan in the form of a joint venture with Sony and automaker Denso. The company also announced potential plans to build its first European factory in Germany.
While these decisions have been seen by many as political choices as much as economic ones, they could also have lasting effects on Taiwan.
“China is the biggest threat we face, but in terms of economic security, I would say the government also needs to pay attention to the danger to Taiwan’s economic security if semiconductors. [shipped] Wu said.
