SMIC Allegedly Caught Attempting To Recruit TSMC Engineers in Their Home City

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SMIC Under Scrutiny: Taiwan Investigates Talent Poaching

China’s Semiconductor Manufacturing International Corporation (SMIC), the nation’s leading chip producer, has come under investigation by Taiwanese authorities for allegedly recruiting engineers and skilled personnel from Taiwan. SMIC plays a pivotal role in China’s objective to build a self-sufficient semiconductor supply chain. However, ongoing U. S.sanctions have significantly impacted the company’s capacity to acquire advanced manufacturing equipment necessary for producing chips below the 7-nanometer threshold. Reports suggest that major Chinese firms, including Huawei, have intensified their efforts to attract talent from the Netherlands, where chip equipment manufacturer ASML is based.

Impact of U. S.Sanctions on SMIC

The U. S.restrictions have hindered SMIC’s ability to access extreme ultraviolet (EUV) lithography machines essential for high-tech chip production. Although some sources report that SMIC is collaborating with other Chinese companies to develop their own EUV technologies, such efforts are unlikely to yield fruit in time to compete with the advanced manufacturing capabilities of Western firms, including Taiwan’s TSMC.

Taiwan’s Tactical Response

In a recent statement, Taiwan’s Investigation Bureau revealed it has intensified efforts to mitigate recruitment by SMIC and similar companies. Authorities allege that SMIC established a front company in Taiwan under a Samoa-based entity purporting to deceive local regulations and attract Taiwanese talent to its operations in China.

Operations and Raids in Taiwan

SMIC chip manufacturer — SMIC is under investigation for talent poaching activities.

Notably, the SMIC entity was set up in Hsinchu, Taiwan’s tech hub, home to TSMC’s headquarters and advanced manufacturing facilities. Taiwanese authorities underline that capturing engineers from TSMC, the world’s largest chip contract manufacturer, was a strategic goal for SMIC.

Increased Investigative Activity

In March alone, Taiwanese investigators conducted raids across 11 companies, covering 34 locations and interviewing approximately 90 individuals. The Bureau highlighted that skilled talents in relevant sectors are increasingly becoming targets for recruitment by Chinese enterprises, noting that it has scrutinized around 100 similar cases since 2020.

Challenges in Chip Manufacturing

According to a recent government document from China, the country lags by at least 15 years in developing indigenous chip manufacturing technology compared to Western capabilities. Beyond SMIC, Huawei has also reportedly increased efforts to recruit employees from Carl Zeiss, a manufacturer of specialized lenses critical for advanced chip fabrication equipment.

While SMIC has the ability to produce 7-nanometer chips, the lack of access to cutting-edge EUV machines has led to difficulties in optimizing the manufacturing process. Consequently, the output yields—the ratio of usable chips from silicon wafers—remain low, posing significant operational challenges for SMIC.

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