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China's IC development threatens Taiwan's trade secrets: report

2018/07/03 13:36:29

New York, July 2 (CNA) China is not only resorting to poaching talent but also stealing trade secrets in its bid to nurture its own semiconductor industry, threatening Taiwanese companies, the Wall Street Journal has reported.

The report datelined Hsinchu, where many prominent Taiwanese high-tech companies including Taiwan Semiconductor Manufacturing Co. (TSMC) are based, said that of 10 recent technology-related prosecution cases, the technology in nine of them ended up with or was intended for Chinese companies.

In late 2016, a TSMC engineer was intercepted in a TSMC investigation before he started to work for rival Shanghai Huali Microelectronics Corp.

TSMC, the world's largest contract chipmaker, accused the employee of illegally downloading, printing and photocopying the company's confidential information he planned to bring to Huali, which hired the TSMC engineer to work for it.

TSMC's case was not new. Citing official Taiwanese official records, the report said technology theft cases more than doubled to 21 in 2017 from eight in 2013.

The report said Taiwanese authorities have not indicted the Chinese entities believed to be behind the trade secret theft cases "often for political reasons and because they don't believe they would be able to enforce court judgments on the mainland."

China is motivated by the fact that it has to import almost all of the logic and memory chips needed to operate the electronic gadgets it exports to the world market in huge quantities.

Beijing imported US$260 billion in chips last year, and it is hoping homemade chips will account for 40 percent of locally made smartphones by 2025, up from about 10 percent at present, the report said.

"China is deliberately targeting Taiwan, whose manufacturers make chips for the biggest American companies, including Apple Inc., Nvidia Corp. and Qualcomm Inc.," the report said in describing Beijing's concentrated attack on Taiwan's semiconductor secrets and talent.

According to Taiwanese government officials and company executives, "China aims both to pressure what it considers a breakaway province and to pursue its own strategic goal of reducing its reliance on foreign suppliers," the report said.

"China is trying very hard to catch up. Over time, it's a very serious threat to Taiwan's economy," Christopher Neumeyer, an attorney specializing in intellectual property for Taipei-based Duane Morris & Selvam, was quoted as saying in the report.

(By Ozzy Yin and Frances Huang)