The Investigation Bureau of Taiwan’s Department of Justice (MIJB) on Friday published a report that accused China of creating fake companies to hire top technology experts who would never have willingly worked for the Communist tyranny.
According to the report, China creates phony business fronts to evade Taiwanese laws that restrict investment and hiring by Chinese firms. One of the marquee examples was a company called Yunhe Zhiwang of Shanghai, a Chinese tech corporation that created a front operation in Singapore to hire staffers from Intel and Microsoft.
An even more troubling example was the Semiconductor Manufacturing International Corporation (SMIC), a chip-making titan partially owned by the Chinese Communist Party. SMIC is the largest chipmaker in China, and the third-largest in the world.
SMIC was added to the U.S. Commerce Department’s national security “entity list” in December 2020 due to “evidence of activities between SMIC and entities of concern in the Chinese military-industrial complex.”
The Commerce Department said SMIC was part of China’s military-civil fusion (MCF) doctrine, which leverages Chinese corporations and their overseas connections to improve the People’s Liberation Army (PLA) and advance Beijing’s aggressive military goals.
“Entity List restrictions are a necessary measure to ensure that China, through its national champion SMIC, is not able to leverage U.S. technologies to enable indigenous advanced technology levels to support its destabilizing military activities,” Commerce Secretary Wilbur Ross explained in December 2020.
The MIJB report said SMIC used a Samoan company to hire employees in Taiwan, bypassing both Taiwan’s restrictions and the U.S. Entity List designation for the Chinese company. Taiwanese officials normally take pains to ensure none of their companies violate U.S. sanctions, particularly in the vital — and politically contentious — semiconductor industry.
Taiwan is a tempting target for illegal tech poaching because it boasts the world’s largest and most advanced chipmaking company, TSMC. The presence of this company and its satellite industries has created a deep pool of technology talent, and many of those desirable employees have deep knowledge of products China is not allowed to purchase.
A top goal of the second Trump administration has been convincing TSMC to build chip factories in the United States. President Donald Trump announced in early March that TSMC has agreed to invest $100 billion in the U.S., hailing it as a “tremendous move by the most powerful company in the world.”
Taiwanese investigators have conducted 34 raids so far this month in connection with the probe into Chinese tech companies and interrogated 90 suspects. A total of 11 companies are currently under investigation for allegedly concealing ties to China. MIJB has conducted over a hundred investigations of Chinese companies allegedly breaking the law by hiring Taiwanese employees since 2020.
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