With the US and Europe denying China every opportunity to get access to advanced technology to power its military and space programme, desperate Beijing faces challenges in making up a chronic shortage of scientific and engineering talent that could help it achieve a goal to become a technology powerhouse of the world.
According to the China Institute for Educational Finance Research, the shortfall of talent in the country’s semiconductor industry has doubled since 2019 when it lacked less than 200,000 professionals with quality engineering background. The same fact gets reflected in another Chinese institution’s data. The China Centre for Information Industry Development’s 2021 report said the country faced a shortage of more than 200,000 quality professionals to manage the activities of the semiconductor industry.
But China’s semiconductor industry has grown in strength from mere 1,300 registered companies in 2011 to 22,800 companies by 2020, The Guardian, a UK-based daily newspaper said. With this, the number of professionals in China have also increased, they lack quality as the country wants to manufacture the most up-to-date chips which are five nanometres or smaller.
As per the British daily, China’s semiconductor industry is mostly dominated by chips that are 24 nanometres or above. In 2022, China’s biggest chip maker, Semiconductor Manufacturing International Corporation (SMIC) reportedly produced a 7-nanometre chip.
Even though it represented a significant improvement in chip manufacturing capability, experts doubt that SMIC would be able to produce such semiconductors at scale. Nonetheless, China wants to achieve a goal of 70% self-sufficiency in semiconductor manufacturing by 2025.
To meet this target, it has resorted to recruiting overseas experts quietly under its Thousand Talents Plan (TTP). To lure foreign talents, it is offering several perks, including home-purchase subsidies, signing agreements of $420,000 to $700,000 and others, said Reuters in its latest report.
The primary task of recruitment of foreign talents lies with China’s Ministry of Industry and Information Technology, Reuters said, quoting people with direct knowledge of the matter. Preference is given for the recruitment of those who have studied at Massachusetts Institute of Technology, Harvard, and Stanford universities of the US.
However, technology export rules adopted by the US Commerce Department in October last year, bar US citizens and permanent residents from extending support to China in developing and producing advanced chips.
Under the US technology export rules, American citizens who decide to work in Chinese firms, may risk losing US citizenship. Notably, the US export control rules target not just individuals but also companies. These rules envisage US companies to require licenses before exporting sensitive technology to China-based entities. Manufacturers like Intel
and Micron are required to get a license from the US Commerce Department in order to export semiconductors and chip-making equipment to Chinese companies.
This year in January, the US’s allies like Japan and the Netherlands, agreed in principle to implement the US export regulations on China and restricted the sale of AI chips and advanced machine tools to China. While the details of the trilateral agreement are not known, “restrictions on the sale of AI chips and advanced machine tools to China will significantly impede China’s drive for high-tech self-sufficiency,” Foreign Policy, a US- based magazine, said.
In desperation for quality chip technology and to reduce the country’s dependency on overseas firms, China started poaching top professionals from Taiwan’s top chipmakers, including United Microelectronics Corp (UMC). It offered a huge pay packet, eight free trips home a year and a heavily subsidised apartment. This drive, which started in 2014, intensified over the years as China-US trade war escalated, said Reuters.
Though there is no exact data on number of Taiwanese professionals poached by Chinese technology firms so far, but unnerved by such acts of companies from mainland China, Taiwanese authorities last year launched cracks down against poaching; they slapped harsher punishment on those who left Taiwanese companies to join Chinese firms under the lure of fat pay packets and perks.
Under its amended National Security Act, Taiwan announced providing individual Taiwanese person prison sentences of up to 10 and 12 years, and fines between $1million and $3.5 million.
Taiwanese authorities also targeted Chinese companies that violated restrictions on hiring Taiwanese. Even Taiwanese companies which acted as fronts for Chinese firms were warned of facing fines of up to $860,000, while Chinese companies operating in Taiwan without authorisation were threatened to face up to three years in jail and fine up to $500,000.
While these measures have proved as a deterrence in the recruitment of Taiwanese individuals by Chinese tech firms, they have not abandoned their habit of poaching professionals from foreign firms based in their country. Earlier this year, Microsoft decided to move some of its best AI researchers away from China to Canada. As per Financial Times, the Beijing-based Microsoft Research Asia (MSRA) has begun seeking visas to move top AI experts from the Chinese capital to its institute in Vancouver in a move to protect its highly trained professionals from poaching by Chinese tech firms.