Taiwan said on Friday that Semiconductor Manufacturing International Corp (SMIC), China’s largest chipmaker, illegally hired engineers from its tech sector using a fake foreign company, as the Taiwan’s Ministry of Justice Investigation Bureau (MJIB) issued a detailed statement accusing SMIC of setting up a shell company through Samoa to quietly plant a fake operation in Taiwan.
The MJIB said SMIC disguised the setup as a foreign investment. Once the front was in place, the company started “actively recruiting” engineering talent on the island without the required government permission.
Taiwan launched the investigation in December 2024, after getting evidence that Chinese firms were operating illegally to pull skilled workers away from Taiwan’s chip industry.
Taiwan investigates 11 companies, raids 34 sites
MJIB officials said a total of eleven companies from China were under investigation in the case, all suspected of illegal recruiting. As part of the operation, agents carried out 34 raids across the country and brought in 90 individuals for questioning. The government’s concern is that Chinese companies are deliberately building unauthorized networks to weaken Taiwan’s semiconductor edge.
The MJIB said it first formed a special task force in late 2020 to handle cases involving talent theft. They didn’t name the other ten companies, but said all were using the same method—pretending to be Taiwanese or foreign businesses, hiding their real ownership, and operating without legal approval.
MJIB officials said SMIC and other firms often used employment agencies to fake assignments, giving engineers the impression they were working for local entities. But in reality, the money and control came from Beijing. These setups let Chinese companies take Taiwan’s tech expertise without building anything legitimate inside the island.
SMIC, based in Shanghai, came under the global spotlight in 2023 when tech analysts discovered it had built the 7-nanometer chip inside a new Huawei smartphone.
That discovery caused controversy because SMIC had been placed on a U.S. export blacklist years earlier, which blocked the company from purchasing equipment from ASML and other top firms, but the company managed to keep producing high-end chips, raising questions about how they got around the tech gap. Taiwan believes engineer poaching is one of the ways.
Taiwan is home to TSMC, the world’s most advanced chipmaker. Engineers trained in Taiwan are in demand globally, and both the U.S. and China are racing to grab them. Washington is trying to convince TSMC to expand its operations in the U.S., while Beijing is trying to build its own chip empire by any means necessary. The MJIB said this specific case is just part of a wider campaign.
In its statement, the bureau said: “Chinese enterprises often disguise their identities through various means, including setting up operations under the guise of Taiwanese, overseas Chinese, or foreign-invested companies, while in reality being backed by Chinese capital, establishing unauthorized business locations in Taiwan without government approval, and using employment agencies to falsely assign employees to Taiwanese firms.”
Cryptopolitan Academy: Tired of market swings? Learn how DeFi can help you build steady passive income. Register Now
