Taiwan looks to dig trenches in battle for semiconductor chip talent

taiwan dig trenches semiconductor battle

Taiwan is strengthening its semiconductor defenses as the Chinese navy postures off its coast.

Taiwanese officials may force Foxconn, formally named Hon Hai Precision, to unwind an $800 million deal with a Chinese chipmaker. Simultaneously Taipei is moving towards protecting its top semiconductor engineers from mainland corporate poachers.

The world’s largest contract electronics maker, Foxconn, raised eyebrows in July when it revealed it owned 20% of China’s longtime semiconductor chip champion Tsinghua Unigroup via a mainland subsidiary. Taiwan’s investment commission, the national body which reviews large deals in China, was furious, and authorities were considering fining the semiconductor maker up to T$25 million ($836,000) for failing to secure the required approvals.

Taiwan’s security officials asked Foxconn to walk away from the investment after dramatic escalations of tensions following U.S. Speaker Nancy Pelosi’s Taipei visit.

The Taiwanese government’s intervention underscores growing local unease over China’s efforts to build up its technological capabilities to protect itself from U.S. sanctions. Talented engineers in Taiwan’s vital $127 billion chip industry have frequently been hired away by Chinese firms over the years.

A 2019 study revealed some 3,000 semiconductor chip engineers, or 10% of the island’s total supply, have been poached by Chinese companies since 2015. The government has increased efforts to curb the outflow. On top of strict investment restrictions, Taiwanese firms are banned from offshoring advanced chipmaking to the mainland. Taipei is also tightening up its Trade Secrets Act.