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Chinese tech companies bypassing U.S. chip restrictions through loopholes is nothing new. The latest reports from Bloomberg and The Register suggest that they have tried to do so by secretly setting up entities in Taiwan, disguising their origins to recruit top engineers and getting access to advanced chip technologies.
Taiwan’s Investigation Bureau of the Ministry of Justice highlights on China’s leading foundry, SMIC, and network chip firm Yunhe Zhiwang (Shanghai) as part of their ongoing probe, according to the reports.
The Register notes that Yunhe Zhiwang (Shanghai), which develops networking chips to be used for China’s datacenters, has recruited former Intel and Microsoft employees. The company reportedly concealed its ownership by operating through a Singaporean firm.
Meanwhile, Bloomberg indicates that SMIC set up a branch in Taiwan under the guise of a Samoa-based company and attempted to recruit local talent.
As noted by The Register, by law, Chinese companies are not allowed to operate or hire in Taiwan without government approval, yet many have bypassed this rule by posing as foreign or local firms. Taiwan’s Investigation Bureau of the Ministry of Justice has reportedly launched large-scale probe into 11 Chinese tech firms led by SMIC in March.
How China’s Sugon and Inspur Dodge U.S. Sanctions for Chips
Notably, another rest of world report, citing The New York Times, brings up more examples. The report indicates that certain Chinese on the U.S. Entity List have bypassed sanctions by using subsidiaries to acquire chips. After Sugon, a Chinese computer server maker, was blacklisted in 2019, former executives launched Nettrix, which sold servers with NVIDIA and Intel chips, the report adds.
On the other hand, rest of world notes that after China’s largest server maker, Inspur Group, was added to the U.S. Entity List in 2023, its subsidiaries continued to buy U.S. chips.
Earlier in March, both Nettrix and six of Inspur Group’s subsidiaries were also added to the Entity List, as per the report.
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(Photo credit: SMIC)
