‘Tip of the iceberg’: Taiwan’s spy catchers hunt Chinese poachers of chip talent

TAIPEI, April 8 (Reuters) – Taiwan’s spy catchers have launched probes into around 100 Chinese companies suspected of illegally poaching semiconductor engineers and other tech talent, a senior official at the island’s Investigation Bureau told Reuters.

That comes on top of seven prosecuted since the start of last year and includes 27 which have either been raided or whose owners have been summoned for questioning by the bureau, the official said.

Home to industry giant TSMC (2330.TW) and accounting for 92% of the world’s most advanced semiconductor manufacturing capacity, Taiwan possesses what China needs – chip expertise in spades.

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A global chip shortage and Beijing’s avowed goal of achieving self-reliance in advanced chips – more forcefully promoted by Chinese President Xi Jinping after a trade war with the former Trump administration – has only intensified the scramble for engineering talent.

Taiwan responded with the creation in December 2020 of a task force within the justice ministry’s Investigation Bureau – its main spy catching organisation – to tackle poaching.

Cases where it has taken action with raids or questioning represented “the tip of the iceberg”, the official said, asking to remain anonymous so that investigations are not impeded.

The Investigation Bureau said the official’s comments represented its views.

Heightened military pressure from China, which claims Taiwan as its territory, has only strengthened Taipei’s determination to protect its chip supremacy – an asset also strategically important to the United States as much of its chip manufacturing is outsourced to the island.

Last month the bureau conducted its biggest operation to date – a raid of eight companies aimed at countering what it said was “the Chinese Communist Party’s illegal activities of talent-poaching and secret-stealing”.

China’s Taiwan Affairs Office did not respond to a Reuters request for comment.


It is not illegal per se for Chinese firms to hire Taiwanese engineers. Taiwanese law, however, prohibits Chinese investment in some parts of the semiconductor supply chain including chip design and requires reviews for other areas such as chip packaging, making it very difficult for Chinese chip firms to operate on the island legally.

Taiwanese engineers are also free to go to China, but many prefer the quality of life on the island, especially while COVID-19 restrictions make travel harder.

One case under investigation involves a firm that purports to be a Taiwanese data analysis company but which authorities believe is an arm of a Shanghai-based chip firm sending chip design blueprints to China, according to the official and another colleague who spoke with Reuters.

In mid-March, after nearly a year of surveillance, the bureau summoned the firm’s owner for questioning. The owner has since been released on bail, they said, declining to identify the company as charges have yet to be laid.

Other tricks employed include incorporating units in tax havens such as the Cayman Islands, making it harder to identify money inflows from China.

Beijing-based Starblaze Technology, an integrated circuit (IC) design house, has been accused of running an R&D centre in the tech hub of Hsinchu without approval. It allegedly conducted job interviews via Zoom and used a Hong Kong company to handle payroll and insurance, according to court documents reviewed by Reuters. The trial is ongoing.

Tongfu Microelectronics (002156.SZ), a Chinese state-affiliated company, was accused of having an illegal office whose employees received salaries in U.S. dollars in offshore accounts wired via a Hong Kong-based subsidiary. The defendants were found guilty in January.

Starblaze and Tongfu did not respond to Reuters requests for comment.


Lucy Chen, vice president of Taipei-based Isaiah Research, says that last year Chinese chip firms came wooing with salary offers two to three times local levels. Among the most sought-after employees are IC designers, who can work remotely.

While it is difficult to compete on salary, local firms aim to provide more secure long-term career development and perks such daycare centres, massages and gyms on site, said an executive at a Hsinchu chip company, declining to be identified.

Those willing to be poached risk not finding work again at Taiwanese tech firms as well as public shaming. Several senior TSMC executives who went to work for SMIC (0981.HK) in China have been branded as traitors in Taiwanese press.

Authorities are also working to increase penalties for poaching. Maximum prison sentences are set to be increased to three years from one year and maximum fines from $5,200 to $520,525.

In a related move, the government has proposed making the leaking of core chip technologies a breach of national security law.

But there are concerns that tougher rules might hinder President Tsai Ing-wen’s drive to build a supply chain spanning materials to chip manufacturing.

“What if we put off legitimate foreign investors and damage our national economy due to overly strict regulation?” said the Investigation Bureau senior official.

($1 = 28.6090 Taiwan dollars)

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Reporting by Yimou Lee and Sarah Wu; Additional reporting by Beijing newsroom; Editing by Edwina Gibbs

Our Standards: The Thomson Reuters Trust Principles.

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Inside Taiwan’s ‘Rainbow Village’ | CNN Travel

Taichung (CNN) — Residents of Taiwan’s Rainbow Village are not your average fellow homo sapiens, but whimsical, brightly-colored animals.

Covered in vibrant colors and funky illustrations from the walls to the floor, the 1,000 square meter art park in Taichung, central Taiwan, has been an Instagrammers’ favorite thanks to its kaleidoscopic visuals, attracting around two million visitors per year before the Covid-19 pandemic.

People don’t visit just for its aesthetics, they also love its backstory: The village was once on the verge of demolition, but one veteran’s simple action of painting saved it and gave it an even more glamourous second life.

The veteran-turned-artist

In 2007, Huang Yong-fu — then 84 years old — learned that his home was going to be demolished and the land sold to developers.

Born in Guangdong province in mainland China, Huang was constantly on the move during his life as a soldier.

He fought in the Second Sino-Japanese War, lived in Hong Kong, then joined the Nationalist army on Hainan Island to fight the Chinese Civil War before retreating to Taiwan with the troops led by Chiang Kai-shek in 1949 following their defeat.

He went on to serve at an airbase in southern Taiwan and finally retired as a clerk at a recruit training center in Taichung. Since then, he had been living in a military dependents’ village, one of the many communities built to accommodate Nationalist soldiers who fled to Taiwan, as well as their families.

An artist touches up a detail at the Rainbow Village.

An artist touches up a detail at the Rainbow Village.

John Mees/CNN

To bid farewell to his home of nearly 30 years, Huang picked up a brush and started painting his furniture. Playful images of imaginative creatures and local superstars were brought to life one after another, crawling from his wardrobe, desk and stools all the way to the exterior walls and the neighbors’ abandoned houses.

Little did he know that his fate — and that of his beloved home — was about to take an unexpected turn.

When students from nearby universities discovered Huang’s artwork, photos of the colorful buildings went viral online. The 11 houses covered in quirky paintings quickly became a photo hotspot under the nickname of “Rainbow Village,” leading to a petition campaign to save it from demolition in 2010.

The Taichung City government eventually agreed to keep the village and turned it into a public park in 2014. Huang, now 98 and known as “Grandpa Rainbow,” was allowed to stay and continue his daily routine — painting the village and greeting visitors.

Paintings of blessings

Wei Pi-ren, 68, has been supporting Huang since 2010 and shares his vision for the village. “We want this place to be fun, healing and romantic,” he tells CNN Travel.

For decades, Wei has been working to preserve the culture of military dependents’ villages and assisting veterans like Huang with hospital visits. When Huang’s younger brother from Hong Kong asked him to look after the veteran and his art, Wei founded Rainbow Creative and recruited young artists and staff to maintain the park.

The company’s art director, 34-year-old Lin Yang-kai, has been painting and studying with Huang for nine years. He is also keen to help the veteran who “experienced wars and separation from his family, but still remains innocent and pure” spread positive energy through his art.

Grandpa Rainbow is depicted in his military uniform, paintbrush in hand.

Grandpa Rainbow is depicted in his military uniform, paintbrush in hand.

John Mees/CNN

“His wish is simple,” explains Lin. “He wants people to enjoy their time here. They can take photos with the illustrations and Chinese blessing phrases and take the happy memories home with them.”

Love and family are repeating themes in the village. Lin believes they reflect what Huang longed for but “was never allowed to have as a soldier during wartime.”

“The murals are mainly about family, love, success, friendship and health — simple happiness we take for granted and have never fought hard to get,” says Lin, pointing to an illustration of a happy family sitting around a dinner table. “He finds comfort in painting them.”

A legacy to last and thrive

Due to health concerns, Huang is currently living at a separate location and rarely visits the village himself.

Still, Rainbow Village — which no longer has any residents — has developed its own life. It keeps evolving as the murals are repaired and renewed by painters like Lin.

Five years ago, Wei and the team came up with an idea to make sure Huang’s creative energy and spirit won’t be confined by the size of the village or Huang’s health conditions.

34-year-old Lin Yang-kai hopes to take the mantle of the Rainbow Village in the next generation.

34-year-old Lin Yang-kai hopes to take the mantle of the Rainbow Village in the next generation.

John Mees/CNN

“He was painting new things every day and we eventually ran out of wall space,” laughs Wei. To solve the problem, Wei rented a warehouse and ordered customized stone boards for Huang to paint. “Grandpa Rainbow and our art team have created numerous new paintings on the boards. They can be screwed onto the walls and displayed anywhere anytime in the future.”

But Wei’s ambition doesn’t stop here. The company plans to bring Huang’s art to more people by building seven Rainbow Villages across Taiwan, representing the seven colors in the rainbow.

“The villages will feature stories and food of military dependents’ villages, and of course, Grandpa Rainbow’s murals,” says Wei.

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‘How long can you maintain it?’ Cost of Taiwan’s pursuit of Covid zero starts to show | Taiwan

At a beachside bar at the southern tip of Taiwan, a handful of visitors in swimwear and bare feet mill around the open air deck, enjoying the warm midweek night, cheap beer, lack of crowds, and zero Covid.

The bar’s owner, in between serving drinks, says domestic tourism to the surf village of South Bay, is booming, but the custom is concentrated on the weekends. There are no international visitors to fill tables during the week, let alone to make up for a difficult three months of forced shutdown during the summer outbreak of Covid.

She says the business has also been affected by supply chain issues – a knock-on effect of the pandemic – and has been unable to buy basics such as mayonnaise or tortillas. “It’s crazy – I haven’t found it in three months.”

The scene sums up the mixed fortunes of Taiwan, as the rest of the world opens up but the island remains firmly closed.

‘There is a price’

For the first 18 months of the coronavirus pandemic, life in Taiwan was blessed. As cities locked down across China, Europe and Asia, and death tolls climbed into the millions, Taiwan was safe, vibrant, almost normal.

Thanks to a strategy of case prevention and swift elimination, it recorded a relatively low 16,430 cases – mostly imported and detected in quarantine – and 847 deaths.

But now, as the world begins opening up, having accepted coexistence with the virus while mitigating it with high vaccination rates and other measures, Taiwan risks being left behind.

Almost two years after Covid first emerged, the island has held tight to the measures that made it an early success – closed borders, strict quarantine, intensive case tracing and widespread mandatory mask-wearing. And there is little sign of these requirements ending.

The island is now among a few holdouts – alongside China and Hong Kong – that are resisting rejoining the post-Covid world and wrestling with what that means for the economy and the public.

The restricted borders have crushed international tourism, hindered trade and exacerbated supply chain issues. Airmail services to and from several countries are suspended. Families have been separated, livelihoods hurt.

Throughout the pandemic tourists and other non-residents have been banned from entry, including the foreign partners and children of Taiwan residents. Authorities recently lifted the ban, but it only applied to the families of Taiwanese citizens, not foreign residents.

“Being unable to be with the one you love is really, really hard,” said French national, Clement Potier, whose partner is stuck overseas. The partial lift was even harder to swallow, he told local media, because “you see that it could be possible, but not for you”.

In 2019 there were more than 29 million international arrivals in Taiwan. In 2020, during the height of the pandemic and prior to vaccines, the figure dropped to 3.9 million. So far this year there have been just 335,000.

“How long can you maintain it? There’s a price for it,” says Prof Chunhuei Chi, the director of Oregon State University’s centre for global health. “Taiwan sacrificed international collaboration in commerce and exchange.”

A woman with a face mask passes National Chengchi University in Taipei
A woman with a face mask passes National Chengchi University in Taipei Photograph: Brennan O’Connor/ZUMA Press Wire/REX/Shutterstock

In July, the Economist Intelligence Unit said the Zero Covid approach used in Asian countries “has delivered both health and economic benefits, and has been popular where implemented”.

“If the rest of the world had adopted a similar approach, zero‑Covid might prove a sustainable strategy,” it said. But they hadn’t, and the policy “will become unviable as the global economy reopens”, the report found.

Some Taiwan-based businesses relying on the global market have begun looking at moving manufacturing on the island, given there is no indication when the problems will ease, because there is no clear roadmap being presented to residents.

Currently all entrants must quarantine in designated hotels or government facilities, and then spend another week “self managing” limited isolation. Home quarantine ended after it was linked to Taiwan’s only significant Delta outbreak in Pingtung county, and observers don’t see it returning soon.

‘We must wait until the virus becomes mild’

A primary factor in Taiwan’s continued closure is its struggle to match international vaccination rates, especially in second doses. A drive to deliver Moderna doses to some sector workers saw delivery of second shots, which are recommended at 28 days by the WHO, delayed to at least 12 weeks, with some recipients forced to cold-call hospitals around Taiwan looking for doses.

A combination of under-ordered supplies, global shortages, and foreign interference by China, means Taiwan’s vaccination program has been largely propped up by significant but inconsistent donations, and lately its own domestically developed vaccine.

About 73% of people in Taiwan had received at least one dose – with the highest proportions among the elderly – and just over one-third has received their second dose. The government says it’s on track to meet its 60% target by year’s end, when they will consider unspecified future changes.

Politics is also a factor, says Prof Chi. With local elections on the horizon, Chi predicts the DPP will wait to open borders because of the high chance any outbreak will be used by the opposition KMT to criticise the government.

“It cannot afford any new outbreak,” he says.

In September the central epidemic command centre (CECC) told the Guardian Covid Zero was not its target but they were heading in that direction. Asked in parliament last month if their plan was for Covid zero or coexistence, health minister Chen Shih-chung appeared to say both.

“The current goal is to achieve Covid-19 zero, but Taiwan must also be prepared to coexist with Covid-19,” he said, suggesting they were hoping the virus eventually lessened in severity.

In October, special adviser to the CECC, professor Lee Ping-ing, appeared to suggest that would take three years. “We must wait until the virus becomes mild and the human immune system can adjust before it can start coexisting with the virus,” he said.

Observers note readying the public is a key issue for the short term if Taiwan is to open up, in order to address strong fear and significant stigma attached to infections.

“Even if Taiwan had 70% of the population who received two doses, it is still worrying to think of opening up,” said one resident on Taiwan’s social media platform PTT, saying other countries have become accustomed to the pandemic.

“Taiwanese are afraid of death and opening after vaccination. They still hesitate.”

Prof Steve Tsang, of the SOAS Institute, said he understands why the government is going slow, “but it will have to accept that we will have to live with Covid now, and the Zero Covid policy is not sustainable”.

“It may well need more time to increase the rate of vaccination before it can relax substantially the travel restrictions, but it should provide clear guidelines on the criteria for doing so.”

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Tanks, propaganda and tourists: Welcome to Kinmen County, ‘Taiwan’s DMZ’

(CNN) — On a hilltop on the northwestern tip of Taiwan’s Kinmen Island stands the Beishan Broadcast Wall, a towering concrete structure dotted with 48 loudspeakers.

Decades ago, this sea-facing propaganda machine blasted songs by Taiwanese singer Teresa Teng — Asia’s late “eternal queen of pop” — across a 10-kilometer stretch of sea, her music aimed at residents of the mainland Chinese city of Xiamen.

Built in 1967, it was a key instrument in the cold war between the Communist Party on the mainland and Taiwan’s ruling Kuomintang. In addition to playing songs by famous Taiwanese singers, authorities broadcast speeches, some of which invited mainland soldiers to defect.

The Beishan Broadcast Wall, once a propaganda tool, is now a popular tourist attraction.

The Beishan Broadcast Wall, once a propaganda tool, is now a popular tourist attraction.

An Rong Xu/Getty Images AsiaPac/Getty Images

Loudspeakers in Xiamen returned the favor, blasting their own nationalistic messages across the water.

Why place so much importance on a tiny island?

Mainland China and Taiwan have been governed separately since 1949 following the Communist victory on the mainland after a bloody civil war, forcing the defeated Kuomintang — or Nationalists — to flee to Taiwan. Despite decades of political hostility, a shared cultural and linguistic heritage mostly endures.

But Beijing considers Taiwan to be an integral part of its territory, and comes down hard on any suggestions to the contrary.

Kinmen Island is part of the wider Kinmen County, which is made up of several islands and islets in the Taiwan Strait between the mainland Chinese city of Xiamen and Taiwan’s main island.

It’s actually closer to Xiamen though, making it a zone of strategic geopolitical importance for decades and, sporadically, the battlefield between the two sides.

Translated as “Golden Gate,” Kinmen was under military administration for 43 years, between 1949 and 1992. As cross-strait relations improved, the broadcasts on the former military base ceased in the early 1990s.

Kinmen’s unique history

In recent years, Kinmen’s islands and islets have become hugely popular tourist destinations for mainland Chinese thanks to the implementation of the “Mini Three Links” in 2001.

The name refers to the commencement of limited transportation, postal and trade relationships between Taiwan and the mainland via coastal cities — opening up Kinmen County and another set of islands, Matsu.

Anti-tank barricades line Guningtou beach, a constant reminder of Kinmen's military history.

Anti-tank barricades line Guningtou beach, a constant reminder of Kinmen’s military history.

An Rong Xu/Getty Images AsiaPac/Getty Images

Evidence of Kinmen’s militarized past still populates the area, adding to its appeal as a destination for history buffs.

“The term ‘Taiwan’s DMZ,’ is my own expression,” Lee tells CNN. “I think most Koreans who visit there will feel the same way.”

He says the loudspeakers, military barricades on the beaches and secret tunnels reminded him of the infamous no-man’s land between North and South Koreas. But he adds that there are many differences, too.

The mainland Chinese city of Xiamen can be viewed from Kinmen's shores.

The mainland Chinese city of Xiamen can be viewed from Kinmen’s shores.

An Rong Xu/Getty Images AsiaPac/Getty Images

“Compared to the DMZ, Kinmen has a stronger image as a tourist destination than as the front line of a war,” says Lee.

“Although there are still troops stationed and many war-related stories as well as scenic spots, Kinmen has an old town where visitors can get a glimpse of the history of the local people.”

Military relics like the broadcasting wall have become major attractions for mainland Chinese tourists. The speakers still play Teresa Ting’s songs, but at a much lower volume and for tourism purposes only.

“During the early days, when Kinmen was under military administration, the island relied on the 100,000 soldiers to sustain the economy,” explains Chien-kang Ting, director of Kinmen County’s Tourism Department.

“As the military government was dismissed and most of the troops removed, Kinmen’s economy suffered. Ever since the opening of Kinmen (in 1993) to the general public, tourism has become the main lifeline of Kinmen’s economy.”

Kinmen Kaoliang Liquor, for example, was a military-run distillery founded in the 1950s. It’s now one of the best-selling liquors in Taiwan and is a must-visit tourist spot on Kinmen Island.

Meanwhile, artillery shells are now used to make the famed Kinmen knives, along with other popular household cookware items and souvenirs for locals and visitors alike.

Mini Three Links: Reconnecting mainland China and Taiwan

Travelers from mainland China have been allowed to travel to Kinmen without applying for an advance permit since 2015.

Travelers from mainland China have been allowed to travel to Kinmen without applying for an advance permit since 2015.

SAM YEH/AFP/AFP via Getty Images

Because there was no direct connection between Taiwan and mainland China prior to the introduction of the Mini Three Links, Kinmen became one of the places “where exchanges between the two sides began,” says Lee.

“South Korean academics visit there to study the ‘Mini Three Links’ and how people across the strait engage in exchanges and live normal lives. So it is a destination for ‘study tours’ for South Koreans, given the virtually non-existent civil exchanges between the two Koreas.”

Since the easing of restrictions in 2001, Kinmen has opened up even further.

Direct flight routes also expanded, with more airlines offering flights to Kinmen Shangyi Airport from multiple mainland cities. Pre-pandemic, more than 40 ferries made the trip between Kinmen and nearby Xiamen each day.

“It opened a historic new chapter for Kinmen’s tourism industry,” says Kinmen Tourism director Ting. “It has become an important channel between the people on both shores. Kinmen’s local economic development relies heavily on the traffic brought forth by the Mini Three Links.”

The pandemic impact

Kinmen welcomed around 2.5 million tourists in 2019. Around 41% of those were from mainland China — a figure that was expected to keep rising.

However, the outbreak of Covid-19 has cast a shadow on the 20th anniversary of the Mini Three Links this year, as ties have been suspended since February 2020, with direct ferries and flights canceled.

“Incoming visitors via ‘Mini Three Links’ plunged by 93.96% in 2020,” says Ting.

The local travel market was brought to a standstill as well due to the pandemic.

“It was a big blow to Kinmen’s tourism industry in the first few months. Most people dared not to take a flight. So for a good half of the year, our business was zero,” says Leo Hung, owner of Huang Cuo San Ceng Lou, a bed and breakfast/restaurant famous for its Taiwanese taro dishes.

Prior to the suspension of the Mini Three Links, Kinmen received “record-high passenger numbers,” says a spokesperson from Kinmen Kaoliang Liquor.

“Transportation was almost at its full capacity every weekend. Half of Kinmen’s tourists were from the mainland so the stopping of the ferries have impacted Kinmen’s tourism industry significantly.”

But Kinmen’s tourism industry rebounded fairly quickly after the first few months, as Covid-19 was quickly contained in Taiwan and local tourism resumed.

Kinmen Kaoliang Liquor Inc

The Kinmen Kaoliang Liquor distillery.

courtesy Kinmen County Government

“The crisis posed a challenge, but also an opportunity for us to review the positioning of our industry,” says Ting.

The tourism office, together with the government, rolled out a range of travel vouchers and events to lure more Taiwanese tourists to Kinmen.

For example, the county introduced a “Calling Kinmen Veterans” campaign to encourage retired soldiers to revisit. Over 25,000 visitors and veterans traveled to Kinmen as part of the promotion, with the tourism industry raking in almost TWD 400 million ($14.3 million).

The county also worked with local operators to launch Taiwan’s first “cruise to nowhere,” inspired by the region’s many “flights to nowhere.”

It also subsidized young creatives to build their businesses and rejuvenate former military districts in 2020.

Their efforts paid off. By July, travel numbers had risen to 184,714 visitors. In August 2020, Kinmen received more visitors than in August 2019.

Kinmen Kaoliang Liquor’s spokesperson says their distillery experienced a boost as well and received a record number of visitors — more than 190,000 — in 2020.

What’s next for Kinmen County?

Kinmen Samei Old Street

Kinmen’s Shamei Old Street.

courtesy Kinmen County Government

Learning from the impact of Covid-19, members of Kinmen’s tourism industry say authorities should expand their offerings and diversify their target audiences.

“The pandemic may continue to affect the world in the next year or two, so the government should develop more exquisite and unique Kinmen tourism offerings,” suggests Hung. “Also as an island economy, Kinmen has minimal sea-related tourism products compared to neighboring Penghu County.”

Kinmen’s tourism spokesperson agrees, saying more emphasis will be placed on boosting themed and experiential travel products — including journeys on water.

Ting reveals that Kinmen plans to host a summer music festival connecting arts, music and battlefields to create a youthful tourism brand and rejuvenate the tourism industry. They will also look to offer new natural attractions and promote lesser known attractions around the islands.

Kinmen natural scenary

Kinmen officials say they will continue to diversify and expand the area’s tourism offerings.

courtesy Kinmen County Government

“Kinmen is home to abundant natural resources,” says Ting. “It is also free of light pollution. We are hoping to introduce night travel packages and encourage the industry members to launch starry night guided tours, showing travelers the beauty of nature in Kinmen.”

In addition to military heritage, Ting highlights Kinmen’s otherworldly and unique attractions as added enticements.

“Kinmen has many stunning exotic attractions. There’s the eye-catching Shamei ‘Morocco’ Old Street, Kinmen’s version of Mont-Sant-Michel (Jiangongyu Islet) and the ‘mini Great Wall’ — the Fengshang Patrol Division Fort,” says Ting.

“You’ll be immediately transported to somewhere else. It’ll completely overthrow what you had in mind about Kinmen.”

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