China's Electronics Industry Satisfies Its Talent Shortage at the Expense of Its Neighbors. Taiwan Is Not Happy
What violations?
According to data Chinese lithography tool maker Naura Technology has been illegally recruiting chip-making engineers in Taiwan, Taiwan authorities have said. The headhunting is seen as part of a broader strategy by Chinese companies to gain a competitive edge in the semiconductor industry by poaching experienced engineers.
Naura, in turn, stated that its activities in Taiwan comply with all local laws and regulations. Of course, its representatives also denied involvement in poaching. It is worth noting that this is a very large organization that supplies its products to the largest chip manufacturers in China, including Semiconductor Manufacturing International Corporation, Yangtze Memory Technologies Corporation and Hua Hong Semiconductor Group.
Other companiesThe companies Taiwan is accusing include iCommsemi, Shanghai New Vision Microelectronics, Nanjing Aviacomm Semiconductor, Emotibot, Tongfang, Chengdu Analog Circuit Technology, and Hestia Power. Most are chip designers. Emotibot, on the other hand, builds automated AI platforms based on technologies like natural language processing and deep learning.
This is not the first time Taiwanese officials and companies have alleged that China has poached skilled engineers. In the past, Chinese chipmakers such as SMIC, HSMC, and QXIC have hired employees from TSMC and UMC to develop advanced process technologies. Other examples of Chinese companies poaching Taiwanese talent include Huawei and SMIC hiring electronic design automation (EDA) specialists. To do this, Chinese companies have used a tried-and-true method: setting up units in Taiwan, disguising the companies as local or foreign (but not Chinese).
This year, Taiwan's ambassador to the United States accused China of trying to compete with Taiwan's semiconductor industry through unethical and illegal means, including stealing intellectual property. China's ambassador to the United States has rejected the accusations, saying Chinese companies have done nothing wrong.
Proven Tactics
China has been using this tactic for years. Semiconductor Manufacturing International Corp. (SMIC), China’s leading chipmaker, was convicted twice of stealing TSMC’s manufacturing processes in the early 2000s. That’s an old example; there are more recent cases.
In 2020, Quanxin Integrated Circuit Manufacturing (QXIC) and Wuhan Hongxin Semiconductor Manufacturing Co (HSMC) actively recruited professionals from overseas. then it worked out to lure away more than a hundred employees – for example, TSMC engineers were offered salaries that were twice their current income.
IT companies really don’t like it when valuable specialists are poached by competitors. In the case of TSMC, the problem is critical: the company has relatively few highly qualified engineers who can work with modern chip manufacturing technologies. Despite a staff of 6,000 engineers, only 150 of them have a PhD degree. And in just a few months, Chinese companies managed to poach two-thirds of these valuable specialists.
Professionals are also important for the Chinese. Chip production technologies are so complex that simply stealing documentation or equipment will not do any good. They need specialists who can set up production.
The outflow of specialists from Taiwan to China has significantly increased since 2015, when the Chinese authorities adopted a program “Made in China 2025”It provided for the transition of Chinese government agencies to domestic computer equipment.
In 2020, it was announced that China would invest $1.4 trillion in the country's electronics industry. The funds will be allocated until 2025. They are provided to electronics and software manufacturers to develop modern chips. Among them are Alibaba Group, Huawei Technologies Co. Ltd, SenseTime Group Ltd. and a number of other high-tech companies. The main goal of the project is to reduce China's dependence on American technologies, which Chinese companies have been successfully doing for the past few years.
In 2021, Taiwan's Ministry of Labor even banned recruitment companies on the island were prohibited from posting ads on behalf of Chinese companies operating in the semiconductor industry. Recruitment platforms and headhunters were prohibited from assisting or representing any company in recruiting people to mainland China. Apparently, these measures did not help much.
