Taiwan spent six years tracking China’s secret chip labs and uncovered 166 alleged illegal operations

Taiwan has spent six years pursuing what a report calls China’s “secret chip laboratories,” uncovering a network of companies accused of concealing their links to China while recruiting semiconductor talent and seeking sensitive technology.

The companies often allegedly used shell firms registered in other countries to hide their ownership, or employed non-Chinese nationals to establish companies on their behalf. Since 2020, Taiwan’s Investigation Bureau has examined 166 cases involving Chinese companies’ illegal possession of assets. At least 36 cases have ended in convictions.

Rest of World reviewed public court records from those 36 cases. All involved convictions for operating technology businesses without approval under Taiwan’s Cross-Strait Relations Act. Thirty-three of the companies focused on semiconductor research and development or chip design. The records do not represent every prosecution because case files generally remain unavailable before judgments are issued.

Taiwan’s Ministry of Justice also investigated 67 cases involving suspected theft of Taiwanese companies’ trade secrets in the Chinese technology sector over the past six years. When allegations go beyond unauthorized commercial activity, prosecutors can use Taiwan’s National Security Act, which criminalizes the theft or unauthorized transfer of “critical technologies.” Violations can bring up to 12 years in prison and a fine of up to 100 million New Taiwan dollars, about $3.1 million.

Taiwanese law requires Chinese companies to obtain government approval before beginning operations on the island. The report says approval has become especially difficult as political tensions between Taiwan and China have increased.

China has pursued semiconductor and advanced-chip self-sufficiency since 2015, a drive accelerated by U.S. trade bans and export controls, according to reporting cited by the article. Chinese companies have recruited Taiwanese experts and engineers, sometimes offering salaries five to 10 times the average, to develop domestic technology.

Taipei views the activity as a national-security threat. Taiwan’s “silicon shield” strategy relies on its technological advantage over China, while the island produces more than 60% of the world’s semiconductors and about 90% of advanced processors. The article says China’s effort to match Taiwan’s semiconductor industry aims both to weaken that advantage and to reduce its dependence on external chip supplies.