Taiwan, with eye on China, to boost protection for semiconductor secrets

Taiwan's government proposed on Thursday a new law to prevent China from stealing its chip technology, amid rising concern in Taipei that Beijing is stepping up its economic espionage.

Tech powerhouse Taiwan makes the majority of the world's most advanced semiconductor chips, used in everything from fighter jets to mobile phones, and the government has long worried about Chinese efforts to copy that success, including through economic espionage, poaching talent and other methods.

Taiwan's cabinet said it had proposed new offences for "economic espionage" under the national security law, setting out punishment of up to 12 years in prison for those who leak core technologies to China or "foreign enemy forces".

Using chip giant TSMC's most advanced 2-nanometer chipmaking technology as an example, cabinet spokesman Lo Ping-cheng said such technology could be deemed vital to Taiwan's security under the new law, and thus extra protection was needed for it, in addition to existing laws on trade secrets.

"Everyone knows that TSMC ... has world-leading technologies," Lo said. "If their technologies were stolen there would be a significant impact."

A designated court for economic espionage crime would be established to speed up trials, Lo added.

The government also proposed tightening laws to prevent Chinese companies from illegally poaching Taiwan talent via firms set up in a third country.

It also toughened punishment for Chinese investment in Taiwan via illegal methods, which the government said had led to many cases of industrial espionage in recent years.

"The infiltration in Taiwan's industries from the red supply chain is getting more and more severe in recent years," Taiwan Premier Su Tseng-chang said in a statement, referring to Chinese tech suppliers.

"They poached our nation's high-tech talents and stole the nation's core and key technologies."

Taiwan's parliament has to pass the revisions before they become law.

(Reporting by Yimou Lee; Editing by Robert Birsel)