Taiwan deepens squeeze on chip tech leakage to China

Taiwan deepens squeeze on chip tech leakage to China

Taiwan, citing national security reasons, has banned exports to mainland China of know-how and raw materials that can be used to make chips smaller than 14 nanometers.

Advanced chip-making technology is now one of 22 core technologies that Taiwan does not want Beijing to obtain, according to the island’s National Science and Technology Council (NSTC). 

The list, which covers the defense, aerospace, agricultural, semiconductor and cybersecurity sectors, took effect immediately after its announcement on Wednesday (December 6). 

“If people have the knowhow to make chips below 14nm, they can make many other chips,” Chen Kwo-liang, director general of the NSTC’s Department of Foresight and Innovation Policies said, citing the opinion of an official advisory board formed by industry experts and academics. 

Chen said Taiwan, taking cues from other countries, would control the exports of a list of items including chip-making equipment, gas and chemical products used in making chips below 14nm. 

In July, Japan’s Ministry of Economy, Trade and Industry imposed export regulations on 23 types of advanced chip-making equipment and raw materials. 

“The announcement of a core technologies list is aimed at protecting Taiwanese firms’ commercial secrets. Anyone who steals these technologies or illegally exports them should be punished under the national security law,” Chen said. 

Last year, Taiwan passed an amendment to its national security law in which those who steal national core technologies for overseas “hostile forces” will face fixed-term imprisonment of between five to 12 years and fines of between NT$5 million (US$158,973) and NT$100 million. 

Taiwan also amended its Cross-Strait Act in 2022 to require its national engineers with core technological skills to apply for permits if they want to work for mainland Chinese firms but have not left their previous positions for three years. 

Liang Mong-song’s case

The NSTC said it spent a year creating the core technologies list and it will unveil another extended list around March or April 2024.

The latest announcement came after Huawei Technologies launched its Mate60 Pro smartphone, which used a 7nm processor made by the Shanghai-based Semiconductor Manufacturing International Corp (SMIC), in late August.

Technology experts said SMIC’s chief executive Liang Mong-song and his team could have made a breakthrough in the N+2 technology, which can make high-energy 7nm processors with deep ultraviolet (DUV) lithography.

The Taiwan Semiconductor Manufacturing Company (TSMC), the world’s leading chip foundry, achieved the technology seven years earlier. Liang had worked for TSMC from 1992-2009.

TSMC is the world’s leading chip producer. Image: Twitter Screengrab / Digitimes

In October 2022, the United States banned American engineers from working for Chinese chip-makers, forcing them to choose between their jobs in China and their US nationality. But that rule did not affect Liang as he is Taiwanese.

Chinese commentators said if Liang is targeted with legal action by Taiwan, he can stay on the mainland for the rest of his life and be a hero in China’s chip sector. However, younger Taiwanese chip engineers may have to rethink their career plans due to the new core technologies list.

“As the US, Japan and South Korea have in recent years strengthened their laws to protect their strategic industries and core technologies, most Taiwanese companies agree that the Taiwanese government should follow suit,” Huang Chun-chien, director of the Mainland China Affairs Division under Taiwan’s Chinese National Federation of Industries, says in an article published by the United Daily News. 

“However, some Taiwanese companies are worried that they will face problems when relocating their core technicians to mainland China,” he says.

If Taiwan keeps expanding its core technologies list, fewer and fewer Taiwanese technicians will go to work on the mainland, making it difficult for the island’s companies to operate their businesses there, Huang said. 

He adds it will be bad for Taiwan in the long run if fewer Taiwanese technicians can participate in research and development projects in mainland China. Huang’s comments were cited by Cankaoxiaoxi.com, or Reference News, and widely circulated in mainland China on Thursday and Friday. 

Wang Jin, an associate professor at China’s Northwest University, says in an article that China should not worry too much about Taiwan’s core technologies list.

China has its own defense, aerospace and semiconductor technologies and does not need to learn from Taiwan, he asserts. More technological blockages will only push China to achieve more breakthroughs, Wang said. 

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Follow Jeff Pao on Twitter at @jeffpao3