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In the spring of 2020, a Taiwanese engineer felt “extremely lucky” to be offered a job as a chip designer at Blue Ocean Smart System, an American company based in his hometown Hsinchu, the heart of Taiwan’s semiconductor industry. He said the role gave him a chance to work on an ambitious AI-chip design project and a $120,000 salary, doubling the industry average, which would help pay off his two children’s private elementary education. But several months into his new role, the engineer, who was 32 at the time, noticed something strange: He was never in touch with any American coworkers, and there was no information about the U.S. office. Instead, he told Rest of World, he spent most of his time working with team members based in Nanjing, China. That’s who he spoke with in weekly online meetings, and with whom he shared his engineering code and chip designs. What followed confirmed the engineer’s suspicion: In August 2021, Taiwanese authorities raided Blue Ocean Smart System, alleging that the company illegally operated in Taiwan by disguising its Chinese ownership behind a locally registered company. The Taiwan-registered company shared the exact same English name as Nanjing-based Blue Ocean Smart System, while its Chinese name differed by just one character. The Taiwan operation was later forced to shut down. Blue Ocean Smart System in Nanjing did not respond to Rest of World’s requests for comment. “I was explicitly told that the company was backed by American investment,” the engineer told Rest of World, recalling the inconsistencies he picked up during his time there. “But I kept going because I was happy at my job.” 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. 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. In 2020, Taiwan stepped up enforcement amid intensifying concerns over China’s tech industry from both Taiwanese and U.S. authorities. MJIB, the island’s equivalent of the FBI, kicked off a special operation involving all of its 2,000 investigators to look into Chinese-linked investments in its technology sector. China has criticized these investigations as “political manipulation.” In 2022, Beijing’s Taiwan Affairs Office spokesperson at the time, Ma Xiaoguang, accused Taiwan’s ruling party of “smearing and intimidating mainland enterprises in Taiwan” with raids that were “politically motivated attempts to obstruct” cooperation and would ultimately harm business interests. Meanwhile, Taiwanese authorities say this Chinese business activity represents a risk to national security. This past April, Taiwan’s National Security Bureau published a report 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.” “Almost everyone in the industry would know or have heard of people who were approached or worked for Chinese companies,” John Chen, a board director at Taiwan-listed chip design company MicroIP, told Rest of World. “Salary offers often involve five times that in Taiwan. … I have heard it later even went up to 10 times. There are a few friends I know who went to China to work because of that,” said Chen, who has spent nearly four decades in the semiconductor industry. Rest of World’s review of court filings, combined with interviews with Taiwanese semiconductor engineers, lawyers, and industry insiders, illustrate the efforts Chinese companies have taken to tap Taiwan’s chip sector — and the work that the Taiwanese government has done to fight them off. The Tai Yuen Hi-Tech Industrial Park is made up of 21 office buildings arranged along wide streets on the outskirts of Taiwan’s semiconductor capital Hsinchu. On a weekday afternoon this spring, the sprawling complex, which houses 300 different tech companies, felt quiet and industrious, with only a handful of employees lingering outside a nearby 7-Eleven. The first major raid in the park came in May 2021, less than a year after the MJIB launched the targeted operations. The investigation targeted a Taiwan-registered company tied to the Chinese networking equipment maker Gongjin Electronics. Gongjin initially attempted to register officially with the Taiwanese government, but the registration was rejected by authorities, who alleged that the company had ties to the Chinese military. Subsequently, prosecutors said, Gongjin set up a Taiwan-registered company using a foreign investment structure, listing a Japanese national as its registered representative — although the operational funds still came from China. Registering as a non-Chinese foreign entity or as a foreign person to disguise Chinese affiliations is one of the most common tactics used by Chinese tech companies to hire Taiwanese engineers, Cheng Lun Huang, a senior supervising prosecutor and spokesperson for the Hsinchu District Prosecutors Office, told Rest of World. Taiwan has strengthened protection of its semiconductor industry in recent years. In 2022, it tightened the Cross-Strait Act and National Security Act with harsher recommended punishments for offenses. The tougher laws were introduced to protect “critical technologies” and Taiwan’s economic competitiveness, amid a growing number of cases involving Chinese companies’ illegal activities on the island, according to an evaluation report for a legislative proposal passed into law in May that year. The legislative changes came as Beijing accelerated its drive for semiconductor self-reliance. Since unveiling its “Made in China 2025” strategy in 2015, Beijing has poured billions of dollars into building a domestic chip industry through state funding and industrial policies to hit its goal of producing 70% of its chip usage domestically. China’s efforts ramped up even further after Washington restricted Huawei’s access to advanced chips in 2019, followed by sweeping export controls in the years that followed. According to an affiliate of the China Semiconductor Industry Association, the number of Chinese chip design companies grew from 736 in 2015 to 3,901 by 2025. 166 Technology cases investigated by Taiwanese authorities over the past six years for allegedly concealing ties to China. For Taiwan, protecting its semiconductor expertise specifically from Chinese companies has become central to its broader national security strategy as Beijing has intensified military and political pressure and reiterated its goal of “reunification.” This strategy, often referred to as the “silicon shield,” posits that as long as Taiwan remains a critical node for high-end chip manufacturing, the U.S. and its allies would assist in its defense in case of a Chinese attack. Over the past six years, the Hsinchu District Prosecutors Office has been on the frontline of this strategy. The office charged around 60 cases involving nearly 190 individuals claiming illegal business operations, more than any other prosecutor’s office in Taiwan. The industries under review ranged from chip design and semiconductor equipment to AI servers and advanced computing. Huang said cases involving Chinese investment in the tech industry are given extra attention. “We believe foreign investors are watching closely on how well we can protect our intellectual property,” Huang said. MJIB told Rest of World a total of 166 cases alleging illegal Chinese operations and talent poaching have been completed, and that more investigations are ongoing. MJIB declined to provide further details about its operations. However, Rest of World reviewed public court records for 36 of those investigations through Taiwan’s judicial database. All 36 led to convictions for breaching the Cross-Strait Act by operating tech businesses without approval. Thirty-three of these cases focused on companies doing R&D or chip design. The number does not represent all cases that were prosecuted, since there is no public record of cases until judgments are handed down. MJIB told Rest of World it also investigated 67 China-related trade-secret cases in the technology sector over the past six years. When investigations involve allegations more serious than unauthorized business operations, prosecutors may pursue charges under Taiwan’s National Security Act, which criminalizes the theft or unauthorized transfer of “critical technologies,” and carries penalties of up to 12 years in prison and fines of up to 100 million New Taiwan dollars (about $3.1 million). “Whether a company has obtained the required approvals is usually pretty clear,” Hsinchu’s prosecutor Huang told Rest of World. “The threshold for proving a trade secrets violation is much higher,” he said. About 70% of cases involving illegal Chinese operations result in prosecution by his office, Huang said, compared with roughly 20% of trade-secret theft cases. One of the highest-profile cases involved XiaomiXiaomiXiaomi is a Chinese consumer electronics company that leads the country in smartphone manufacturing and sales.READ MORE, which Taiwanese authorities alleged was behind an unauthorized smartphone chip R&D operation on the island. While the Chinese consumer electronics giant was legally authorized to sell its products in Taiwan, prosecutors said a Xiaomi co-founder directed two former Xiaomi executives to establish a separate chip development business on the island in 2019. They recruited more than two dozen local engineers. According to court documents, Xiaomi’s Beijing subsidiary paid for the research and compensation costs at the Taiwanese operation. In 2024, the two executives — including a former chief financial officer of Beijing-based Xiaomi — were convicted of illegal business operations under the Cross-Strait Act. Xiaomi has not publicly responded to the allegations. A more recent case involved Chinese smartphone brand OnePlus. A court document last November revealed that Taiwanese authorities had issued an arrest warrant for founder Pete Lau, alleging he was involved in operating an unauthorized software R&D outfit on the island that recruited more than 70 engineers in Taiwan. Prosecutors also charged two Taiwanese citizens with allegedly running the operation on Lau’s behalf since 2014. Lau, who is also the senior vice president and chief product officer at OnePlus’ mother company Oppo, did not respond to Rest of World’s requests for comment. Neither company responded to requests for comment. It has been very challenging for some of my clients to prove they had no awareness, or had no way to verify, whether their investors’ roots were Chinese.”Vincent Huang, an attorney at the Taipei-based WHP law firm MJIB claims that even major Chinese semiconductor firms such as the Semiconductor Manufacturing International Corporation, or SMIC, China’s most advanced chip foundry, have used a foreign entity to set up a company in Taiwan to poach tech talent. MJIB’s official press release said that SMIC registered as a Samoan company to operate within Taiwan. Few of the Chinese companies linked to these investigations have publicly responded to the allegations. Gongjin Electronics, Xiaomi, and SMIC did not respond to Rest of World’s requests for comment. Shanghai-listed chip design company VeriSilicon is one of the few Chinese companies to have publicly commented on legal proceedings against it in Taiwan. After Taiwanese authorities raided the company’s Taiwan subsidiary in 2022 over allegations that it had conducted business activities on the island without the required approval, founder and CEO Wayne Dai, in an interview with Chinese media, said the office was merely for sales activities and had never employed engineers or operated chip-testing equipment. VeriSilicon also did not respond to Rest of World’s questions. As early as 2014, China had a strong incentive to seek overseas technology and talent as its semiconductor industry tried to play “catch up” with global competitors, Hui He, who heads global tech advisory firm Omdia’s semiconductor research in China, told Rest of World. She said many Chinese companies established operations and hired local talent in places such as Taiwan, South Korea, and the U.S. to advance their products while supporting overseas markets. “These moves were largely driven by business needs,” said He. “They were all abiding by market principles. I don’t think they were driven by geopolitical considerations — it is just how the designated location’s legal system interprets these activities,” she said. “Many Western and Taiwanese semiconductor companies are also still operating in China and hiring locals, isn’t it?” Since MJIB started its investigation six years ago, China has made meaningful progress in certain areas of chip design. But in the most cutting-edge chip technology, experts estimate China still lags behind TSMC by anywhere from three to 10 years. While Chinese companies still seek expertise to build advanced technology, He said their reliance on poaching foreign talent has diminished in the last three to five years. “There have been more legal restrictions from places like the U.S. and Taiwan,” she said. “China’s semiconductor industry started to have its own talent pool in the last two years, too.” According to available data, it appears that MJIB’s efforts peaked in 2021, the first full year of its campaign, when it raided 100 companies. But authorities have not released sufficient data to determine whether the decline reflects fewer violations or less investigative activity. Taiwan’s industry insiders and legal experts say there is greater general scrutiny and awareness now of China’s involvement in Taiwan’s tech scene than when the MJIB started its targeted crackdown. Vincent Huang, an attorney at the Taipei-based WHP law firm, told Rest of World he has represented more than a dozen clients summoned for questioning by the MJIB in its investigations into illegal Chinese investment. “It has been very challenging for some of my clients to prove they had no awareness, or had no way to verify, whether their investors’ roots were Chinese,” the attorney told Rest of World. “But now, the Taiwanese public is more aware that working for a company backed by Chinese investments could be illegal,” he said. 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. In the U.S., authorities have prosecuted cases involving Chinese efforts to obtain critical technology, including trade-secret theft by employees at U.S. aerospace technology companies. In January, a former Google engineer was found guilty in a California court for stealing AI trade secrets for a company he founded in China. Nicholas Eftimiades, a former U.S. defense department official whose work included tracking China’s economic espionage, told Rest of World that Chinese companies tailor their approaches to local conditions. In South Korea, for example, Chinese company recruiters would stand outside tech offices to approach exiting workers, he recounted. Eftimiades, who is now a senior fellow at the Atlantic Council think tank, said he believes that the Chinese companies’ methods targeted by the Taiwanese authorities have largely gone unnoticed by the global community. “The technique appears to be … more specific to Taiwan, at least as far as semiconductors go,” he said. “I think the U.S. has got its hands full trying to wrestle with the theft that happens within its own borders.” However, Eftimiades said the U.S. should not take Chinese activities inside Taiwan lightly, even if most of the allegations are not classified under trade-espionage laws. “It has consequences,” he said. “The problem is we lose trillions of dollars in wealth.” “Is it espionage if I sit there poaching talents? Well, in some places it is. We are dealing with different definitions depending on the country, and it’s a problem,” he said, adding that the U.S. should have a coordinated policy with allies like Taiwan. “If the one thing China has proven, it is flexible and resilient. The minute you step on it one way, they turn around and do another,” he said. For some Taiwanese engineers, the fight against talent poaching by Chinese tech companies has become personal. The Hsinchu-based chip designer, who found himself unwittingly working for a Chinese company, said that after leaving Blue Ocean Smart System, he was approached about joining another small chip-design company. He couldn’t find much information about the company and suspected it was another front for a Chinese operation. He didn’t pursue the position. “I made up my mind to not join startups or companies that risk falling into a gray area involving Chinese investments,” he said. Eventually, he got an offer from an American chip design company. This time, he did his due diligence before taking the job.
In the spring of 2020, a Taiwanese engineer felt “extremely lucky” to be offered a job as a chip designer at Blue Ocean Smart System, an American company based in his hometown Hsinchu, the heart of Taiwan’s semiconductor industry. He said the role gave him a chance to work on an ambitious AI-chip design project and a $120,000 salary, doubling the industry average, which would help pay off his two children’s private elementary education. But several months into his new role, the engineer, who was 32 at the time, noticed something strange: He was never in touch with any American coworkers, and there was no information about the U.S. office. Instead, he told Rest of World, he spent most of his time working with team members based in Nanjing, China. That’s who he spoke with in weekly online meetings, and with whom he shared his engineering code and chip designs. What followed confirmed the engineer’s suspicion: In August 2021, Taiwanese authorities raided Blue Ocean Smart System, alleging that the company illegally operated in Taiwan by disguising its Chinese ownership behind a locally registered company. The Taiwan-registered company shared the exact same English name as Nanjing-based Blue Ocean Smart System, while its Chinese name differed by just one character. The Taiwan operation was later forced to shut down. Blue Ocean Smart System in Nanjing did not respond to Rest of World’s requests for comment. “I was explicitly told that the company was backed by American investment,” the engineer told Rest of World, recalling the inconsistencies he picked up during his time there. “But I kept going because I was happy at my job.” 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. 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. In 2020, Taiwan stepped up enforcement amid intensifying concerns over China’s tech industry from both Taiwanese and U.S. authorities. MJIB, the island’s equivalent of the FBI, kicked off a special operation involving all of its 2,000 investigators to look into Chinese-linked investments in its technology sector. China has criticized these investigations as “political manipulation.” In 2022, Beijing’s Taiwan Affairs Office spokesperson at the time, Ma Xiaoguang, accused Taiwan’s ruling party of “smearing and intimidating mainland enterprises in Taiwan” with raids that were “politically motivated attempts to obstruct” cooperation and would ultimately harm business interests. Meanwhile, Taiwanese authorities say this Chinese business activity represents a risk to national security. This past April, Taiwan’s National Security Bureau published a report 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.” “Almost everyone in the industry would know or have heard of people who were approached or worked for Chinese companies,” John Chen, a board director at Taiwan-listed chip design company MicroIP, told Rest of World. “Salary offers often involve five times that in Taiwan. … I have heard it later even went up to 10 times. There are a few friends I know who went to China to work because of that,” said Chen, who has spent nearly four decades in the semiconductor industry. Rest of World’s review of court filings, combined with interviews with Taiwanese semiconductor engineers, lawyers, and industry insiders, illustrate the efforts Chinese companies have taken to tap Taiwan’s chip sector — and the work that the Taiwanese government has done to fight them off. The Tai Yuen Hi-Tech Industrial Park is made up of 21 office buildings arranged along wide streets on the outskirts of Taiwan’s semiconductor capital Hsinchu. On a weekday afternoon this spring, the sprawling complex, which houses 300 different tech companies, felt quiet and industrious, with only a handful of employees lingering outside a nearby 7-Eleven. The first major raid in the park came in May 2021, less than a year after the MJIB launched the targeted operations. The investigation targeted a Taiwan-registered company tied to the Chinese networking equipment maker Gongjin Electronics. Gongjin initially attempted to register officially with the Taiwanese government, but the registration was rejected by authorities, who alleged that the company had ties to the Chinese military. Subsequently, prosecutors said, Gongjin set up a Taiwan-registered company using a foreign investment structure, listing a Japanese national as its registered representative — although the operational funds still came from China. Registering as a non-Chinese foreign entity or as a foreign person to disguise Chinese affiliations is one of the most common tactics used by Chinese tech companies to hire Taiwanese engineers, Cheng Lun Huang, a senior supervising prosecutor and spokesperson for the Hsinchu District Prosecutors Office, told Rest of World. Taiwan has strengthened protection of its semiconductor industry in recent years. In 2022, it tightened the Cross-Strait Act and National Security Act with harsher recommended punishments for offenses. The tougher laws were introduced to protect “critical technologies” and Taiwan’s economic competitiveness, amid a growing number of cases involving Chinese companies’ illegal activities on the island, according to an evaluation report for a legislative proposal passed into law in May that year. The legislative changes came as Beijing accelerated its drive for semiconductor self-reliance. Since unveiling its “Made in China 2025” strategy in 2015, Beijing has poured billions of dollars into building a domestic chip industry through state funding and industrial policies to hit its goal of producing 70% of its chip usage domestically. China’s efforts ramped up even further after Washington restricted Huawei’s access to advanced chips in 2019, followed by sweeping export controls in the years that followed. According to an affiliate of the China Semiconductor Industry Association, the number of Chinese chip design companies grew from 736 in 2015 to 3,901 by 2025. 166 Technology cases investigated by Taiwanese authorities over the past six years for allegedly concealing ties to China. For Taiwan, protecting its semiconductor expertise specifically from Chinese companies has become central to its broader national security strategy as Beijing has intensified military and political pressure and reiterated its goal of “reunification.” This strategy, often referred to as the “silicon shield,” posits that as long as Taiwan remains a critical node for high-end chip manufacturing, the U.S. and its allies would assist in its defense in case of a Chinese attack. Over the past six years, the Hsinchu District Prosecutors Office has been on the frontline of this strategy. The office charged around 60 cases involving nearly 190 individuals claiming illegal business operations, more than any other prosecutor’s office in Taiwan. The industries under review ranged from chip design and semiconductor equipment to AI servers and advanced computing. Huang said cases involving Chinese investment in the tech industry are given extra attention. “We believe foreign investors are watching closely on how well we can protect our intellectual property,” Huang said. MJIB told Rest of World a total of 166 cases alleging illegal Chinese operations and talent poaching have been completed, and that more investigations are ongoing. MJIB declined to provide further details about its operations. However, Rest of World reviewed public court records for 36 of those investigations through Taiwan’s judicial database. All 36 led to convictions for breaching the Cross-Strait Act by operating tech businesses without approval. Thirty-three of these cases focused on companies doing R&D or chip design. The number does not represent all cases that were prosecuted, since there is no public record of cases until judgments are handed down. MJIB told Rest of World it also investigated 67 China-related trade-secret cases in the technology sector over the past six years. When investigations involve allegations more serious than unauthorized business operations, prosecutors may pursue charges under Taiwan’s National Security Act, which criminalizes the theft or unauthorized transfer of “critical technologies,” and carries penalties of up to 12 years in prison and fines of up to 100 million New Taiwan dollars (about $3.1 million). “Whether a company has obtained the required approvals is usually pretty clear,” Hsinchu’s prosecutor Huang told Rest of World. “The threshold for proving a trade secrets violation is much higher,” he said. About 70% of cases involving illegal Chinese operations result in prosecution by his office, Huang said, compared with roughly 20% of trade-secret theft cases. One of the highest-profile cases involved XiaomiXiaomiXiaomi is a Chinese consumer electronics company that leads the country in smartphone manufacturing and sales.READ MORE, which Taiwanese authorities alleged was behind an unauthorized smartphone chip R&D operation on the island. While the Chinese consumer electronics giant was legally authorized to sell its products in Taiwan, prosecutors said a Xiaomi co-founder directed two former Xiaomi executives to establish a separate chip development business on the island in 2019. They recruited more than two dozen local engineers. According to court documents, Xiaomi’s Beijing subsidiary paid for the research and compensation costs at the Taiwanese operation. In 2024, the two executives — including a former chief financial officer of Beijing-based Xiaomi — were convicted of illegal business operations under the Cross-Strait Act. Xiaomi has not publicly responded to the allegations. A more recent case involved Chinese smartphone brand OnePlus. A court document last November revealed that Taiwanese authorities had issued an arrest warrant for founder Pete Lau, alleging he was involved in operating an unauthorized software R&D outfit on the island that recruited more than 70 engineers in Taiwan. Prosecutors also charged two Taiwanese citizens with allegedly running the operation on Lau’s behalf since 2014. Lau, who is also the senior vice president and chief product officer at OneP
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