Taiwan is intensifying its crackdown on Chinese businesses operating illegally on the island, where such companies frequently hide their ownership through shell corporations registered abroad or by recruiting non-Chinese nationals to front the operation. Under Taiwan’s Cross-Strait Act and related investment regulations, Chinese firms must secure a government permit before they can begin doing business. Not every applicant receives that approval, particularly as political tensions between Taipei and Beijing have escalated in recent years.
The push comes as China works toward semiconductor self-sufficiency, an effort that started in 2015 and gained momentum after Washington moved to restrict Beijing’s access to Western technology through trade bans and export controls. To stay competitive, many Chinese companies are recruiting engineers and specialists from across the Taiwan Strait, especially those experienced in Taiwan’s semiconductor industry. Some firms have reportedly offered salaries five to ten times above the average to lure that talent.
Why Chip Talent Is a National Security Issue
Taipei views this recruitment as a direct threat to its national security. The island’s “silicon shield” strategy depends on maintaining a technological edge over China, a lead intended to give allies incentive to help defend Taiwan in the event of an invasion. Taiwan accounts for more than 60% of global semiconductor production and manufactures roughly 90% of the world’s most advanced processors, meaning any disruption to that supply would ripple across the global economy.
By developing a chip industry capable of rivaling Taiwan’s, China aims to weaken that advantage while securing a domestic supply of the processors it needs without depending on outside sources.
166 Investigations and 36 Convictions Since 2020
The Ministry of Justice Investigation Bureau (MJIB), Taiwan’s counterpart to the FBI, has opened 166 cases involving illegal Chinese ownership since 2020. Court records show that at least 36 have ended in convictions. Penalties can include up to three years in prison and fines ranging from NTD 120,000 (about EUR 3,270) to nearly NTD 25,000,000 (roughly EUR 688,350).
Of the 36 companies found guilty of violating the Cross-Strait Act, 33 were engaged in semiconductor research, development, and design. Separately, the agency has investigated 67 cases in which Chinese companies allegedly stole trade secrets from Taiwanese firms.
The companies accused of breaking Taiwan’s ownership rules are not minor players. Businesses investigated and raided were reported to have links to tech giant Xiaomi, smartphone brand OnePlus and its parent company Oppo, and Semiconductor Manufacturing International Corporation (SMIC), China’s most advanced chipmaker.
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Image: tomshardware.com
