Sources: Huawei is investing in Chinese lithography companies and helping them secure deals with leading fabs like SMIC to reduce reliance on foreign suppliers (Financial Times)

Taiwan is intensifying its efforts to combat Chinese tech companies that mask their Chinese ownership to operate within its borders. The country's Ministry of Justice Investigation Bureau (MJIB) has been investigating 166 cases since 2020, resulting in 36 convictions – primarily in relation to semiconductor research, development or design.

Taiwanese law doesn't explicitly forbid Chinese companies from establishing operations in Taiwan, but requires government approval under the Cross-Strait Act. However, by concealing their Chinese ownership, these companies have attempted to evade such restrictions.

Many of the Chinese firms involved in this scheme have created shell companies in foreign nations or enlisted non-Chinese nationals to register their businesses, presenting them as either Taiwanese or non-Chinese. This comes amid escalating geopolitical tensions, as China has been intensifying its efforts to achieve semiconductor self-sufficiency following US restrictions. Reports suggest that Chinese enterprises have been luring Taiwanese engineers with salaries up to ten times the average wage.

Taiwan, which accounts for over 60% of global semiconductor production and generates approximately nine out of every ten of the world's most advanced processors, has become a prime target for Chinese companies seeking to recruit high-caliber talent. The MJIB has also uncovered 67 cases involving Chinese firms suspected of stealing Taiwanese trade secrets.

Notable victims include Xiaomi, OnePlus, Oppo, and the Semiconductor Manufacturing International Corporation (SMIC). The penalties imposed in these cases range from approximately $3,800 to $800,000, with potential imprisonment sentences of up to three years.