A senior official at the Taiwan's Investigation Bureau told Reuters that Taiwan's spy catchers have launched probes into around 100 Chinese companies suspected of illegally poaching semiconductor engineers and other tech talent.

That comes on top of seven prosecuted since the start of last year and includes 27 which have either been raided or whose owners have been summoned for questioning by the bureau, the official said.

Taiwan possesses chip expertise in spades as it is home to industry giant TSMC and accounts for 92% of the world's most advanced semiconductor manufacturing capacity.

A global chip shortage and Beijing's avowed goal of achieving self-reliance in advanced chips - more forcefully promoted by Chinese President Xi Jinping after a trade war with the former Trump administration - has only intensified the scramble for engineering talent.

Taiwan responded with the creation in December 2020 of a task force within the justice ministry's Investigation Bureau - its main spy catching organisation - to tackle poaching.

Cases where it has taken action with raids or questioning represented "the tip of the iceberg", the official said, asking to remain anonymous so that investigations are not impeded.

The Investigation Bureau said the official's comments represented its views.

Heightened military pressure from China, which claims Taiwan as its territory, has only strengthened Taipei's determination to protect its chip supremacy - an asset also strategically important to the United States as much of its chip manufacturing is outsourced to the island.

Last month the bureau conducted its biggest operation to date - a raid of eight companies aimed at countering what it said was "the Chinese Communist Party's illegal activities of talent-poaching and secret-stealing".

China's Taiwan Affairs Office did not respond to a Reuters request for comment.

It is notable that it is not illegal per se for Chinese firms to hire Taiwanese engineers. Taiwanese law, however, prohibits Chinese investment in some parts of the semiconductor supply chain including chip design and requires reviews for other areas such as chip packaging, making it very difficult for Chinese chip firms to operate on the island legally.

Taiwanese engineers are also free to go to China, but many prefer the quality of life on the island, especially while COVID-19 restrictions make travel harder.

Lucy Chen, vice president of Taipei-based Isaiah Research, says that last year Chinese chip firms came wooing with salary offers two to three times local levels. Among the most sought-after employees are IC designers, who can work remotely.

While it is difficult to compete on salary, local firms aim to provide more secure long-term career development and perks such daycare centres, massages and gyms on site, said an executive at a Hsinchu chip company, declining to be identified.

Those willing to be poached risk not finding work again at Taiwanese tech firms as well as public shaming. Several senior TSMC executives who went to work for SMIC in China have been branded as traitors in Taiwanese press.

Authorities are also working to increase penalties for poaching. Maximum prison sentences are set to be increased to three years from one year and maximum fines from $5,200 to $520,525.

In a related move, the government has proposed making the leaking of core chip technologies a breach of national security law.

Image source: Reuters