Secretly Building Semiconductor Factories
In response to the United States’ semiconductor sanctions, China’s “Semiconductor Self-Reliance” strategy is gradually coming to the surface. Given the immediate challenge of countering U.S. sanctions, China is discreetly pouring substantial funds into attracting overseas semiconductor talent. Furthermore, China is intensifying its efforts to covertly acquire semiconductors and semiconductor equipment, all while focusing on alleviating the shortage of semiconductors through secret manufacturing facilities.
According to industry sources on Sept. 6, domestic headhunting firms are increasingly recruiting semiconductor experts to work for local Chinese companies without disclosing the names of these companies. One firm posted a job advertisement on a hiring website seeking candidates with experience in DRAM production (PIE) and development (PA) from the S (Samsung Electronics) and H (SK hynix) semiconductor companies. In the job title, they mentioned the workplace as “Seongnam Bundang (domestic),” but in the body of the advertisement, they specified it as “overseas.” They also noted a preference for proficiency in the Chinese language. In essence, this implies that the hiring entity is, in fact, a Chinese semiconductor company.
The company stated, “We were compelled to mark it as ‘domestic’ due to registration requirements for job postings,” and added, “It is a large-scale semiconductor company located overseas, and the position involves overseas work. We can disclose the workplace only to qualified candidates.” Furthermore, they pledged to provide top-tier benefits, including salary, housing, transportation, and access to international schools for employees and their children.
Another job posting on a different employment website is seeking semiconductor experts to work in China. Similar to the previous case, this company did not disclose the specific company name but mentioned that it is a company with around 1,000 employees located in Guangdong Province, China. The advertisement seeks candidates with over eight to ten years of experience in various fields, including semiconductor electrostatic chuck (ESC), ceramic powder, electronic paste, and more. Notably, when it comes to salary, it mentioned, “Salary won’t be an issue if you are selected,” hinting at exceptional compensation packages.
China’s “talent hunting” is not a recent phenomenon, but its dynamics have changed due to U.S. sanctions and pressure. While it openly recruited talent in the past, it has adopted a more discreet approach recently, operating under the radar to avoid the scrutiny of major countries.
Particularly, when the U.S. put the brakes on China’s overseas talent recruitment program known as the “Thousand Talents Plan (TTP),” China was reported to have restarted the program under a different name, “Qiming.” This program focuses on recruiting talent in sensitive or highly confidential scientific and technological fields, such as semiconductors. Unlike the TTP, which was operated by China from 2008 to 2018, the Qiming program does not disclose information about the candidates on government websites or similar platforms. Foreign media stated the U.S. previously criticized the TTP as a government-led industrial espionage program and interpreted the move to ban employment in advanced Chinese semiconductor sectors for U.S. citizens and permanent residents as a response to that criticism.
Chinese authorities are reportedly recruiting overseas talent through the Qiming program and offering incentives such as housing subsidies, contract bonuses ranging from 3 million to 5 million yuan (approximately 545 million to 910 million won or US$410,000 to US$683,300), and even extravagant perks like diamonds, designer bags, and cars.
China is employing various means to not only recruit overseas talent but also to secure semiconductor and equipment imports and technology. The objective is to operate discreetly, avoiding the watchful eyes of the U.S.
Huawei, which was placed on the U.S. export blacklist, has reportedly received strong support from Chinese authorities. Since last year, Huawei has been secretly constructing semiconductor manufacturing facilities across China. According to the Semiconductor Industry Association (SIA) in the U.S., Huawei has received approximately US$30 billion (around 40 trillion won) in support from the Chinese government in Shenzhen City and has acquired more than two existing factories while also building new facilities at more than three sites.
In this process, SIA explains that Huawei is using the names of other companies to acquire and construct factories. As the U.S. government has banned transactions between Huawei and U.S. companies since 2019 citing national security concerns, Huawei has adopted a strategy of using different labels to deceive U.S. authorities and avoid scrutiny.
There are also estimations that China may have imported semiconductor equipment controlled by the U.S. through friendly countries. According to UN trade statistics, Malaysia’s imports of semiconductor equipment from the top three global exporters – the U.S., the Netherlands, and Japan – increased by US$580 million (approximately 770 billion won) last year. This represents a 127.7 percent increase compared to the previous year.
What’s particularly noteworthy is that China’s imports of semiconductor equipment through Malaysia also increased to US$590 million (approximately 780 billion won). In the market, there is speculation that China may have used Malaysia as a means to circumvent U.S. export restrictions on semiconductor equipment and secure additional equipment.
In China, there is an underground market where advanced semiconductor products like U.S.-based Nvidia’s high-end “A100” chips, which are restricted from direct export to China, are illicitly brought in and traded through various means. Overseas companies purchase these products and, when they have excess inventory, release them into the market. Chinese sellers then buy these products and sell them in China, including in Shenzhen. Some companies have reportedly established subsidiaries in India, Taiwan, and Singapore to indirectly import A100 chips through these entities. However, the prices of products traded in the underground market are significantly higher, reaching around US$20,000 (approximately 26 million won), which is double the regular market price. Additionally, the quantities available through this illicit market are insufficient to meet China’s supply needs.
Furthermore, China has been consistently attempting to acquire technology companies, including semiconductor firms, through capital investment. In 2021, before the U.S. tightened its semiconductor export regulations against China, there were efforts such as the attempted acquisition of Korean semiconductor company Magnachip by Wise Road Capital, a Chinese private equity fund (PEF). Magnachip was listed on the New York Stock Exchange, and any sale required approval from U.S. authorities. At that time, U.S. authorities cited national security concerns and ultimately prohibited the sale, leading to the deal’s failure. More recently, there have been controversies surrounding China Investment Corporation (CIC), a Chinese sovereign wealth fund, reportedly acquiring U.S. and U.K. technology companies under the name of Goldman Sachs, a U.S. investment bank. These actions have raised concerns and increased scrutiny.