Taiwan sounds alarm bells as it scrambles to protect ‘crown jewels’ from China

Chinese ambassador warns against trade with Taiwan

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Taiwan has the most dominant semiconductor industry in the world. Its biggest company, the Taiwan Semiconductor Manufacturing Company (TSMC), accounts for more than half of the global market. However, the disputed state is now facing threats from industrial espionage as China looks to develop its own mainland semiconductor industry.

According to Nikkei Asia: “Taiwan is preparing to introduce tougher laws to protect the island’s crown jewel semiconductor industry from Chinese industrial espionage.”

On Thursday, the Taiwanese government imposed harsh punishments for those who engage in “economic espionage”, with the offenders being sentenced to 12 years in prison

The approved amendments to Taiwan’s National Security Act also imposed a 10-year sentence for the unapproved use of critical national technologies and trade secrets outside of Taiwan.

The regulations stated that any official who is working with, or supported by the Taiwanese government, would have to receive their approval for any trips made to Mainland China.

The Act imposed a strict fine of between 2 million and 10 million New Taiwan dollars (about £53,000 and £264,000) for failing to do so.

At a press conference, Lo Ping-cheng, spokesperson for the Executive Yuan said: “High-tech industry is the lifeline of Taiwan.

“However, the infiltration of the Chinese supply chain into Taiwan has become serious in recent years.

“They are luring away high-tech talent, stealing national critical technologies, circumventing Taiwan’s regulations, operating in Taiwan without approval and unlawfully investing in Taiwan, which is causing harm to Taiwan’s information technology security as well as the industry’s competitiveness.”

According to Mr Lo, Taiwanese President Tsai Ing-wen saw an “urgent need” to tackle this kind of crime by amending the law to establish a more complete national security front line.

Mr Lo said: “We have to raise the protection level and increase the alert to the highest level.

“This is a necessary move to protect our national security.”

Over the past few years, China has targeted Taiwan’s semiconductor industry and its experienced workers, in a bid to boost its own capabilities.

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According to the Taiwanese government, Chinese companies have made numerous attempts to steal trade secrets involving semiconductor chips.

According to industry experts, the economic slowdown from the COVID-19 pandemic, combined with the tougher restrictions on movement during that period led to a slowdown of the movement of talent from Taiwan to China.

Many Chinese companies have been circumventing Taiwanese restrictions on foreign companies by acting through affiliates or even asking other representatives to help set up operations in Taiwan, according to an official from the Mainland Affairs Council.

This is why the government has even raised the punishment for unlawfully aiding Chinese companies set up in Taiwan.

Previously offenders were subject to one year in prison or a NT$150,000 fine (£4,000) to three years in prison or an up to NT$15 million fine (almost £4million).

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