Engineers From Taiwan Bolstered China’s Chip Industry. Now They’re Leaving.
TAIPEI, Taiwan — The job offer from a Chinese semiconductor company was appealing. A higher salary. Work trips to explore new technologies.
No matter that it would be less prestigious for Kevin Li than his job in Taiwan at one of the world’s leading chip makers. Mr. Li eagerly moved to northeast China in 2018, taking part in a wave of corporate migration as the Chinese government moved aggressively to build up its semiconductor industry.
He went back to Taiwan after two years, as Covid-19 swept through China and global tensions intensified. Other highly skilled Taiwanese engineers are going home, too.
For many, the strict pandemic measures have been tiresome. Geopolitics has made the job even more fraught, with China increasingly vocal about staking its claim on Taiwan, a self-ruled democracy. The Taiwanese government has begun to discourage local engineers from going to China, concerned that they were taking proprietary information with them.
“Some who went to work in China were villains who exchanged secrets for money,” said Mr. Li, 40. “Some wanted to be free from the work pressures in Taiwan. And there were those who seriously wanted to explore new areas.”
The prospects that enticed Taiwanese engineering talent to China, feeding a pipeline for lagging Chinese semiconductor companies hoping to compete with global rivals, are rapidly diminishing.
Semiconductors are now vital strategic assets in the pitched geopolitical rivalry between the United States and China. As Washington tries to crimp China’s capacity to make advanced chips, Taiwan, the world’s biggest producer of high-end semiconductors, finds itself at the center of what some are calling the 21st century’s version of the arms race. While President Biden and his Chinese counterpart, Xi Jinping, adopted a warmer tone at their first face-to-face presidential meeting this week, it was clear that Taiwan remained a serious point of contention between the two countries.
Taiwan itself faces increasing unease in Washington. The secretary of commerce, Gina Raimondo, and others have said that, even though the United States continues to support Taiwan militarily, it needs to be less dependent on the island democracy for the chips needed in sophisticated weapons.
Sweeping bans imposed by the Biden administration last month targeting China’s chip industry have put the island’s premier chip maker, Taiwan Semiconductor Manufacturing Company, on the front line of likely disruptions to the global supply chain. Adding to the pressure, the Biden administration has pressed TSMC into building a plant in Arizona to help diversify the United States’ sources of chips.
Beijing has blasted the new rules, saying they “will not only harm Chinese companies’ legitimate rights and interests but also hurt the interests of U.S. companies.” And the Chinese government, which is pushing its own strategy of self-reliance in key areas like semiconductors, is expected to retaliate in ways that could punish TSMC.
The Chinese government, for example, could bar the American companies that build data centers in China from using high-end chips manufactured by TSMC, said Jason Hsu, a former Taiwanese legislator who is now at the Harvard Kennedy School.
So far, TSMC said, the impact of the new rules has been limited. The administration granted a one-year waiver to the company, allowing it to continue expanding its facility in the Chinese city of Nanjing. TSMC also has a plant in Shanghai.
But Washington has barred Chinese and Taiwanese engineers with U.S. citizenship or a green card from working in China’s chip-making facilities. The ban will force about 200 Chinese and Taiwanese engineers to either leave China or give up their U.S. citizenship, Mr. Hsu said.
“This has such a chilling effect on every Taiwanese national working in the semiconductor industry in China. Everyone is on edge,” Mr. Hsu said. “What if a U.S. government intelligence agency thinks you are violating U.S. security and wants to arrest you?”
For years, China poached Taiwan’s semiconductor engineers, who often have Ph.D.s and are essential to keeping the world’s most advanced chip-making factories humming.
In 2019, about 3,000 Taiwanese semiconductor engineers were working in China, nearly 10 percent of the 40,000 engineers at the heart of the industry’s work force, according to the Taiwan Institute of Economic Research, an independent group.
A handful of senior executives also joined rival Chinese firms, including the country’s most prestigious, Semiconductor Manufacturing International Corporation, or SMIC, which is based in Shanghai. Chinese state entities are among the company’s major shareholders, and the Pentagon has expressed concerns that SMIC has ties to the Chinese military. SMIC did not respond to requests for comment.
One former TSMC executive, Liang Mong-song, a prized engineer who had been the company’s director of research and development, joined SMIC as co-chief executive in 2017. Last year, China’s state-run media reported that Mr. Liang led a team of engineers who developed SMIC’s seven-nanometer chip technology, a more advanced chip than the company had previously made, and a sudden breakthrough that partly drove the Biden administration to announce its new rules.
Another former TSMC senior executive, Chiang Shang-yi, had hoped to work on a new method of producing microchips at the Shanghai company. In an interview this year with the Computer History Museum in California, he said going to China was “one of the foolish things” that he had done. Mr. Chiang left SMIC last year.
Taking a job at a Chinese company has always been dicey for Taiwanese engineers, said Syaru Shirley Lin, a Taiwanese economist and a former partner at Goldman Sachs specializing in the tech industry. “People would say, ‘Did you go there?’” she said. “Soon, it will be like going to the Soviet Union during the Cold War.”
Evonne Wang, 31, looked for a job in China to broaden her experience beyond TSMC.
Several headhunting firms offered her opportunities, but she settled on an American company based in China. She figured that if she went to a Chinese company her reputation might be tarnished when she returned home.
“Some Taiwanese semiconductor companies have qualms about previous experiences of working in China,” said Ms. Wang, who also returned to Taiwan as Covid took hold.
With China making industry advances, Taiwan has begun to take measures to stop the brain drain and protect a core economic driver. The island’s economy grew more than 6 percent last year, in part from the surge in global demand for semiconductors.
Gin Chang, 30, a Taiwanese engineer who worked in southern China for a year and doubled his salary, said he understood the growing unease in Taiwan about its young engineers’ contributing to China’s growth.
“I don’t think there should be restrictions on us working in China,” Mr. Chang said. “But from the perspective of the government in Taiwan, if the Chinese economy grows because of its growing semiconductor industry, then Taiwan’s economic situation could be endangered.”
Under regulations introduced in early 2021, headhunters in Taiwan are barred from advertising jobs in China’s microchip industry. The Ministry of Justice established a task force that ordered raids on Chinese firms operating in Taiwan. The Chinese companies were suspected of being fronts created to recruit local engineers for jobs in China; more than 40 cases of poaching workers and stealing secrets have been prosecuted since last year, the government said in September.
Much of the poaching involved Chinese companies trying to capture Taiwanese expertise, applying that knowledge in their plants and then ditching the workers, said one headhunter, Michael Lo.
“China’s corporate culture is just three words: ‘Raise and kill,’” Mr. Lo said. “It will first cultivate you and spend lots of money and resources on you, then steal your technologies and, finally, fire you,” he said.
Mr. Li, the engineer who went back home, had worked his way up the Taiwanese semiconductor industry. He had four jobs at smaller companies before joining TSMC at its headquarters in Hsinchu Science Park, a campus sometimes known as Taiwan’s Silicon Valley, 30 minutes by high-speed train from Taipei, the capital.
TSMC is the pride of Taiwan. Visitors to its main building, set in lush foliage, are greeted by a striking sign with the name of the company’s founder, Morris Chang. One of Taiwan’s multibillionaires, Mr. Chang, 91, grew up in China, attended Harvard and M.I.T. and worked at Texas Instruments before starting TSMC in 1987.
When Mr. Li arrived at TSMC, he felt lucky but found it a slog inside the foundry, he said.
“I had the feeling of being a small screw most when working in TSMC,” Mr. Li said. “Going to China was like looking forward to a place without the constraints of an outdated framework. You can take the plunge by going there.”
For now, Mr. Li is staying in Taiwan, working for an American chip company operating there and siding with the invigorated patriotic sentiment and the ethos of individual liberty.
“The advantage of working in Taiwan is that you don’t have to worry about officials shutting down the whole company because of one thought,” he said. “The atmosphere is very important. At least I can watch all kinds of programs criticizing the governments on both sides of the Taiwan Strait without worrying about being arrested.”