Previously unpublished government data reveals the scale of Taiwan’s crackdown on Chinese companies accused of hiding their ties while recruiting chip talent and pursuing sensitive technology.
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Blue Ocean Smart System is one of the 166 cases investigated by Taiwanese authorities over the past six years for allegedly concealing ties to China, according to exclusive data provided to Rest of World by Taiwan’s Ministry of Justice Investigation Bureau, or MJIB. Another 67 China-related trade-secret probes in the technology sector were completed in the same period, according to MJIB figures that have not previously been made public.
The crackdown remains active. As recently as August 5, the MJIB announced it had raided another 18 technology companies, following operations carried out just days earlier between July 13 and August 4.
Taiwan is a global powerhouse in chip manufacturing. Thanks to companies like Taiwan Semiconductor Manufacturing Company — known as TSMC — Mediatek, and United Microelectronics Corporation, the island nation produces over 60% of the world’s semiconductors and 90% of the world’s most advanced chips. But the strength and vibrancy of the industry has also attracted unwanted interference, with Chinese competitors accused of illegal investments and talent poaching. Taiwan’s crackdown reflects a broader trend to limit China’s access to critical technology across the world, and in the U.S.
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In Taiwan, Chinese investments are scrutinized by a unique legal framework due to the political tensions between the two governments. Under the Cross-Strait Act and related investment regulations, Chinese companies — whether they’re a bubble tea shop or a tech company — are required to obtain government approval before operating on the self-ruled island.
Chinese companies have repeatedly skirted these regulations by operating outside official approval, setting up shell companies, or registering their operations under non-Chinese nationals.
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Taiwanese authorities say this Chinese business activity represents a risk to national security. This past April, Taiwan’s National Security Bureau published a report (opens pdf) warning that China continues to use “indirect channels” for “talent poaching, technology theft, and the acquisition of controlled goods” to obtain advanced chipmaking technologies in order to “break through international technological containment.”
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Beyond Taiwan, countries in other regions have also become increasingly alert to Chinese firms’ efforts to acquire critical technologies. The Netherlands, for example, is investigating the national-security implications of the Chinese ownership of Nexperia, a Dutch semiconductor manufacturer which became controlled by Chinese investors through acquisitions. The Dutch and the Chinese governments have been dealing with this issue through diplomatic channels.
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