The Taiwanese government reported on Wednesday that the rise of the US-China trade war has caused increased efforts by Beijing to infiltrate Taiwan’s thriving and world-leading chip industry.
Hu Mu Yuan, the deputy head of Taiwan’s National Security Bureau, told Reuters “the Chinese communists are stealing other countries’ intellectual property to boost their own power.” He highlighted that not only is the effort affecting Taiwan, but also Japan and South Korea.
The government official warned that China has attempted to skirt around preventative Taiwanese laws by setting up front companies on the island nation. Taiwan believes that these efforts are in an attempt to steal technology and poach talent.
At a parliamentary committee meeting, Taiwan’s Economy Minister Wang Mei Hua stated that because the ongoing US-China trade dispute has “obstructed” the “development of mainland China’s semiconductor industry,” officials in China are tapping “poaching” and infiltration tactics “in order to achieve self-sufficiency in the supply chain.”
Wang explained that such efforts “are the quickest way for mainland China” to boost its industry.
Last year, China’s leading global tech giant, Huawei Technologies Ltd., suffered economically because of US sanctions. TSMC, which received 14% of its revenue from a semiconductor owned by Huawei, stopped doing business with the company under pressure from the US government. In 2019, seven American companies accounted for over half of TSMC’s global revenue.
At an industry conference, Richard Yu, president of Huawei’s consumer unit, said, “Unfortunately, in the second round of US sanctions, our chip producers only accepted orders until May 15,” and that due to Huawei’s inability to produce their own, there were “no chips and no supply” therefore production halted in September that same year.
Earlier this month, the Biden administration labeled Huawei and four other Chinese tech firms as a threat to national security. Huawei has continued to deny accusations that it facilitates Chinese spying, and has instead accused Washington of using national security as an excuse to stop competition in the tech industry.
An October 2020 report from the Center for Strategic and International Studies states the US maintains interest that Taiwan remains integrated into the global economy, and continues to serve as a provider of global public goods. As a result, US-Taiwan relations have greatly increased over the past few years, which has in turn fueled the already high tensions between the island and China.
As reported by Reuters, Hu believes that “preventing Taiwan’s key technology and high-tech personnel from being infiltrated by the ‘red supply chain’ has become an important task to protect our industry’s competitiveness and ensure our economic security.” The so-called “red supply chain” is a reference to the color of China’s ruling party.
It is unclear how China may respond to allegations voiced by Taiwan’s officials that it has engaged in the intentional poaching of the island nation’s tech insiders. Earlier this week, the country announced tax breaks to increase semiconductor development in response to US sanctions.