[LINK] 'Huawei offers triple pay to lure staff from a key supplier of chip-making parts'

[Stephen Loosley]

China Is Bombarding Tech Talent With Job Offers. The West Is Freaking Out.

Huawei offered triple pay to lure staff from a key supplier of chip-making parts, sparking German investigation


By Bertrand Benoit, Liza Lin, Heather Somerville and Kim Mackrael Updated Nov. 27, 2024 

Archived: https://archive.md/wK1tR#selection-5659.0-11917.14

From: https://www.wsj.com/world/china-tech-poaching-job-offer-pay-raise-f8ceac5b



OBERKOCHEN, Germany—Executives at Zeiss SMT, which makes indispensable components to build the most powerful semiconductors, got some troubling news last fall. 

Headhunters from Huawei Technologies, the Chinese tech firm, were trying to poach its employees.  

Staff with access to sensitive Zeiss know-how received LinkedIn messages, emails and calls from Huawei representatives, offering them up to three times their salaries to join the Chinese company, according to people with knowledge of the situation. 

The push triggered an investigation by German intelligence officials, who feared it could provide a back door for Huawei to access some of the most sophisticated intellectual property. The investigation remains open, people familiar with the matter say. 

It was the latest sign that talent-poaching has become a crucial front in the battle between China and the West for tech supremacy. 

As Western governments make it harder for China to access sensitive technologies—a trend expected to continue under the administration of President-elect Donald Trump—many Chinese companies are trying to get ahead by luring away top engineers in areas such as advanced semiconductors and artificial intelligence.  

Chinese firms are focusing on several tech hubs, including Taiwan, parts of Europe and Silicon Valley. Some obscure their Chinese origins by forming local ventures that hire the employees to avoid drawing attention from local officials, authorities say. 

Oberkochen, Germany, where Zeiss SMT’s headquarters are off-limits to most visitors because its technologies are considered so advanced.

The push is forcing officials in the U.S. and Europe, many of whom view recruiting as an ordinary business activity that shouldn’t be restricted, to confront whether they need to do more to police the practice, and if so, how. 

Taiwan, which already has strict rules on Chinese recruitment, said in September that it had launched a crackdown, accusing eight mainland 
Chinese tech companies of illegally poaching talent from the island, threatening Taiwan’s competitiveness.

South Korean authorities are toughening punishments for individuals who illegally transfer sensitive technologies to foreign countries such as China, including when they are recruited. The country is grappling with several cases, including one in which an ex-Samsung Electronics executive was charged with illegally obtaining Samsung’s factory blueprints to build a copycat chip plant in China.

The U.S. and Europe remain fairly open for recruitment by most Chinese companies. But European intelligence officials say they have been watching with concern as China-linked actors try to lure experts from the continent’s high-tech companies. U.S. intelligence agencies said in their latest threat assessment that they believed China was trying to use talent recruitment as one way to become a science and technology superpower. 

Semiconductor secrets

Western security officials are especially concerned about China’s efforts to target ASML Holding, among the world’s most important tech companies, and its suppliers, including Germany’s Zeiss. The Dutch firm is the only one capable globally of making sophisticated machines needed to print structures smaller than 1/10,000 of the width of a human hair onto chips for advanced AI and other applications. 

It took ASML decades to master such lithography machines, known as EUV scanners. Without them, China can’t make chips at the cutting edge. 

The Dutch government prevents ASML from shipping its EUV machines, which also could have military applications, to China.

Since 2021, Huawei has hired dozens of engineers and other staff based in China who were working on lithography and optics for companies including ASML and other Western firms, data from LinkedIn and Chinese job networking site Maimai shows. A Chinese engineer who left ASML about a decade ago with knowledge of some of its software later set up a rival company in China, according to corporate registrations and ASML. 

One former Taipei-based employee of ASML said he received inquiries from Chinese recruiters every month for two years after he left the company in 2020. The engineer said Huawei was particularly persistent, with repeated efforts to connect on LinkedIn. He never responded.

ASML said it had no indication of unusual recruitment activity toward its employees and the rate at which employees leave is very low in the Netherlands and globally.

China’s Foreign Ministry said it wasn’t aware of the examples of talent poaching, adding that China’s interaction with foreign talent is no different from that of other nations. Huawei didn’t respond to requests for comment.   

‘Spray and pray’

China has made clear that recruiting is a priority, especially for competitive technologies such as AI. A government blueprint for AI development in 2017 called for attracting the “sharpest” talent, including “international top scientists” in areas such as machine learning, automatic driving and intelligent robots.

Luring foreign engineers can provide a valuable shortcut for Chinese companies because their experience cannot be easily duplicated or stolen, said Paul Triolo, a partner at business consulting firm DGA Group.  

“Governments now care more about this,” he said, although determining where to draw the line on acceptable recruitment will be “a very difficult task and difficult to enforce.”  

Many governments have already restricted academic and business partnerships with China or introduced investment-screening programs for Chinese acquisitions. State funding for Chinese companies enables them to offer salaries beyond what Western companies can pay. 

Germany has banned Huawei technology from some parts of its telecommunications networks.

Many engineers are reluctant to entertain such offers, citing reputational risks and concerns about fitting into Chinese corporate culture. Yet Chinese companies make so many approaches—a strategy one former Huawei recruiter described in an interview as “spray and pray”—that inevitably some say yes. 

Often, they bring trade secrets with them. Last year, the chief executive of Californian semiconductor company FemtoMetrix testified to Congress that his company’s trade secrets had been stolen when three employees left to start a semiconductor company in China, bringing thousands of FemtoMetrix files with them. 

Alon Raphael, FemtoMetrix’s CEO, said in his testimony it was an example of China’s “playbook for the theft of American intellectual property.”
In an interview, Raphael said his company is “barely” still in business, and he hasn’t been able to raise substantial funding since the theft. 

China’s Foreign Ministry said China respects intellectual property rules and that any reports of alleged intellectual-property stealing were baseless slander. 

Taiwan’s troubles

In Taiwan, home to Taiwan Semiconductor Manufacturing, the world’s largest contract chip manufacturer, officials say they started seeing an increase in Chinese talent poaching and trade-secret theft around 2015. Frustrated, they approved new rules in 2022 that bar anyone from leaking technology critical to national security and Taiwan’s industrial competitiveness to foreign countries. 

Offenders face up to 12 years in prison and a fine of up to the equivalent of about $3 million. Taiwan also strengthened penalties for domestic firms that act as fronts for Chinese companies to hire talent. 

“The know-how is in their brains, and in some cases, a whole team could be poached by a Chinese company,” said Sun Chen-yi, deputy director general of the investigation bureau at Taiwan’s Ministry of Justice. Between 2020 and July 2024, the ministry investigated about 90 cases of talent poaching, most related to semiconductors, electronics and machinery, Sun said.

A Taiwan Semiconductor Manufacturing Co. facility in Nanjing, China.

Several years ago, Liang Mong Song, a former senior Taiwanese engineer at TSMC and Samsung, joined China’s largest contract chip maker, Semiconductor Manufacturing International. Liang is often credited with the rapid ascendance of Shanghai-based SMIC, which last year helped Huawei to produce its most advanced smartphone processor, a seven-nanometer chip used in one of its most powerful phones. 

In Taiwan’s latest crackdown, authorities said they raided 30 locations and questioned 65 individuals across four cities. Among the eight companies accused of illegally poaching talent was a large Chinese chip toolmaker.

Some Chinese chip firms try to obscure their origins, working with headhunters based in Singapore and Hong Kong. They also pair up with Taiwanese to open companies on the island to hire local engineers, investigators say.

German connection

German authorities are also concerned about China’s efforts to lure engineers from its ASML suppliers. 

Zeiss SMT’s specialized mirrors form the centerpiece of ASML’s elaborate EUV systems, which are sometimes the size of a bus. Zeiss’s technologies are considered so advanced that its headquarters are off-limits to most visitors. Images in its promotional materials are carefully edited so as not to give away trade secrets. 

When Zeiss employees flagged Huawei’s poaching attempts last fall, they shared recruiters’ profiles with their managers, according to people with knowledge of the situation. Although no employees jumped ship, the head lobbyist for Zeiss SMT’s parent company raised the matter with government officials, triggering the German intelligence investigation, people familiar with the matter say. 

Zeiss and Germany’s domestic intelligence agency, the Federal Office for the Protection of the Constitution, also known as BfV, declined to comment.

It later turned out that Huawei had also been targeting Trumpf, a German company that produces a laser amplifier that creates a concentrated light source to produce chip details, some of which are a fraction of the size of a grain of sand.

[A Trumpf employee inspects a semiconductor wafer in Ulm, Germany.]

A Trumpf spokesman said it “has also registered intensified approaches by Chinese companies such as Huawei targeting our employees.” None was successful, he said.

Berlin authorities have held off from interfering too much in business decisions such as whom employers can hire. 

Berlin recently adopted legislation barring telecommunications operators from using Huawei components in sensitive parts of Germany’s networks, echoing more stringent restrictions the U.S. imposed on Huawei in 2020. But the Chinese company’s handsets and other products are still sold in the country. Huawei runs five research centers across Germany working on optical systems and other areas. 

Many government officials are skeptical that poaching can be prevented. New legislation that could have made it harder for Chinese companies to set up in Germany with a view to recruiting talent is likely to fail after Chancellor Olaf Scholz’s government collapsed. 

Still, Friedrich Merz, head of the center-right Christian Democratic Union and, according to polls, the likeliest candidate to become the next chancellor, has sounded tougher notes on China.  

“German companies are also a target,” he told German newswire DPA in an interview earlier this year. “And that is not OK.” 



Joyu Wang in Taipei and Dustin Volz in Washington contributed to this article.

Write to Bertrand Benoit at bertrand.benoit at wsj.com, Liza Lin at liza.lin at wsj.com, Heather Somerville at heather.somerville at wsj.com and Kim Mackrael at kim.mackrael at wsj.com

Corrections & Amplifications

Germany’s domestic intelligence agency is known as BfV. An earlier version of this article incorrectly spelled it as VfB. (Corrected on Nov. 27)
Copyright ©2024 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Appeared in the November 27, 2024, print edition as 'China Firms Lure West’s Tech Talent With Huge Raises'.


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What do you think?

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rm

ronald moore
17 hours ago
Not surprising at all. They are already heavily invested in almost all of our southern neighbors.
They don't care where they recruit their talent. Their tenacles have reached around the world for at least the last 15 20 years. And they have been very successful at it

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Andrew Grogan
18 hours ago
China has border "exit" controls.  Westerners beware, you can be refused to leave by the government.  It is all very efficient.

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TB

Thomas Brown
20 hours ago
Downfall of being a free society is that we allow our enemies to walk freely among us.  They buy our land, our companies, and now our people.  

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Michael Mallari
20 hours ago
There are soooo many highly-educated, highly-experienced, and very talented tech engineers and tech leaders in the market who have been unemployed for several months and even a few years ... the low-hanging fruit for China. I'm curious how these engineers will decide between getting spoiled by China and unemployment. My hypothesis: As companies are becoming hyper-optimized in their hiring and retention practices, that very thing will be the tipping point. Why is it getting harder and harder to work in in-demand jobs, when someone else is making it easier? Canada is already pouching talent. It will be so much easier for China to do the same (and more).
(Edited)

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Sree Srinivasan
1 day ago
The Swiss, German, and other talent may have resisted 3X salaries but watch out; they may not be able to resist if the Chinese entice them instead with that old reliable: 3-letter word ending with X!

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Raymond Lee
1 day ago
Agree.  Everyman's downfall.

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SAMUEL CUSHINERY
1 day ago
And here I thought Sree was talking about tax!

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Michael Mallari
20 hours ago
I was thinking the same.  Ha!

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Masood Mortazavi
1 day ago
Truth hurts but it doesn't change.
China spent between $2 to $3 trillion to upgrade its cities, its country-side, its innovation environment, business organizations, and its transaction-and-transportation infrastructure during the same 20 years when the US wasted $14 trillion of its national tax treasury on militarism, murder and mayhem in West Asia propping a regime which was intermittently but intently exterminating a local population. 
Now, the US blames China for its own drastic policy mistakes.
Unfortunately, for the present power elite, entertaining a false account of reality will never produce a better policy.
https://www.wsj.com/articles/who-won-in-afghanistan-private-contractors-troops-withdrawal-war-pentagon-11640988154
(Edited)
link entity
Who Won in Afghanistan? Private Contractors
wsj.com

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J Yang
1 day ago
Just look at how many American companies, according to the word used in this article, "stole" talents from around the world to build up American technologies, paying them 3x, 4x wages many times. Silicon Valley companies are filled with Chinese and other foreign tech talents. 

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Michael Mallari
20 hours ago
Fact.

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Mark Ryan
1 day ago
As soon as workers get too good to be true offers to be paid more, the government steps in to stop it. If these people are worth that amount with their skills to a foreign company, then they should be able to do whatever they like.  Politicians all over the planet when they leave office take jobs working for foeriegn governments as "advisers", "consultants" or "after dinner speakers". If an ycountry prevents its citizens from working in another country then they are the ones who are restricted freedom, in other words behaving exactly the same as what they are accusing China of being.

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DONALD BIBEAULT
1 day ago
The Chinese try every possible route to undermine our country. When my nephew graduated from MIT a few years ago every category of degree such as "nuclear engineering science" had two thirds of its graduates Chinese. Of course degrees alone don't confer competence but combined with good experience it can be a substantial drain on our capability. Our government should undertake to a innumerate all of the Chinese initiatives to undermine our strength

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Michael Mallari
20 hours ago
So true. I've seen it first hand when I was an MS student at Columbia, and later as an adjunct faculty at Columbia. Over 75% of students in my STEM program were Chinese (not even Chinese American). I'd hate to compare this to an arms race, but money talks. Are we investing enough into the very, very early stages of our future generations so that they're prepared for the rigor of a STEM education and career?
(Edited)

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Mike Y
22 hours ago
That is the way US stealing talents from countries all around the world using money or scholarship etc as incentive, causing huge brain drain to those countries and helping US advance. Now China is just emulating what US has been doing. And you're crying foul

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TB

Thomas Brown
20 hours ago
But with current immigration policy, we educate people and then force many of them to go home because we won't let them work here.  Basically building their economies and not ours.

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A Jogalekar
1 day ago
How is offering employees of companies triple their salaries “stealing IP”, exactly? Some would call it “capitalism”. To counter it we need better STEM education and to pay our scientists and engineers better. But none of that can happen when both parties are interested in denying science which they don’t like and scoring idealogical points over the other side.

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Eleonora Jones
1 day ago
America is afraid of the brain drain that it has practiced for a long time. Funny.

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Martin Schneider
17 hours ago
It worked for us, so yes, we should worry about an enemy using it.  "Fair" is not a factor,

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John L
1 day ago
"A Trumpf spokesman"?  Are all these articles written by AI now? AI can't spell the last name of most known man in the world, but may soon trigger WW3. 

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Eleonora Jones
1 day ago
Your little human brain certainly skipped this paragraph: “ It later turned out that Huawei had also been targeting Trumpf, a German company that produces a laser amplifier that creates a concentrated light source to produce chip details, some of which are a fraction of the size of a grain of sand.” 
You’re welcome.

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Will Feng
1 day ago
Poaching employees is not stealing technology. Violating patent laws is stealing technology. China has some of the best electric vehicle and battery engineers. Why not poach them with 3x pay and a green card? While you're at it, why not consider poaching me? 🐕

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WW

WSJ WSJ
1 day ago
so true

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JOHN AASTED
1 day ago
If the job is critical to the west's security the rule should be simple:  take the job and go to jail.  

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WSJ WSJ
1 day ago
hahha you better do this and nobody would like to be under this regime and would grow contempt

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Eleonora Jones
1 day ago
That’s ridiculous 

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Martin Schneider
17 hours ago
WHY?

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Dolo Santos
1 day ago
3x a German Engineer salary is just a third of a Bay Area salary. I met German AI engineers in charge of 100 people how make less than $100k/year.

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John L
1 day ago
But they have universal health care, early retirement and sausages on demand, with free beer steins. 

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Kevin Walmsley
1 day ago
Literally a photo, in the article itself, of a Taiwan Semiconductor plant located in Nanjing.
 
Tech companies one day are complaining to the WSJ about Chinese companies trying to hire away their top talent.   And the comment sections predictably fill up with those accusing anyone who takes that offer of committing treason.
 
Those same companies --  Intel, Qualcomm, Samsung, Apple, TSMC, Microsoft -- open new innovation centers, in partnership with local Chinese governments.  All of them do.  And nearly half of ASML's sales are in China, because China is where everything gets built that uses semiconductors.
 
Great comment section though.  Never disappoints.

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EJ

Eleonora Jones