The Labor Ministry of Taiwan has told local recruiters to remove all listings for jobs in mainland China, especially those in critical industries such as semiconductors, Nikkei Asia reported on Friday.

Why it matters: The island is a hot destination for Chinese firms to hire chip talent. Taiwan is home to companies like Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker; and smartphone chip designer MediaTek, a major rival to Qualcomm.

  • As China’s semiconductor industry races to catch up with international standards, talent is one of its highest hurdles. The China Semiconductor Industry Association (CSIA), an industry body backed by China’s Ministry of Industry and Information Technology, estimated that the industry faces a shortfall of around 220,000 skilled workers as of the end of 2020.

READ MORE: Where firms are looking to fill China’s chip talent gap

Details: The labor ministry banned recruitment platforms and headhunters from helping or representing any company hire individuals for work in mainland China, according to Nikkei, citing a government notice. The regulation is effective as of Wednesday, according to the report, which cited a local recruiter who informed clients of the new rules.

  • “Due to geopolitical tension between the US and China, China’s semiconductor development has suffered some setbacks and as a result, China has become more aggressive in poaching and targeting top Taiwanese chip talent to help build a self-sufficient supply chain,” said the ministry in the notice.
  • The ministry said headhunters may face fines if they violate the regulation. “If the recruitment involves semiconductors and integrated circuits, the penalty will be even higher,” the notice said.
  • Taiwanese workers are still allowed to work on the mainland, including in the semiconductor industry.

Context: On March 9, Taiwanese prosecutors raided two local recruiters who allegedly broke the law by recruiting semiconductor workers from the island to work for a Chinese chipmaker, according to local media reports.

  • Previously, there were no government bans on the hires of local workers for Chinese firms. A 1992 local law which forbids Chinese firms from doing business on the island without government approval has been used to restrict recruiting on the island previously.
  • In August, Nikkei Asia reported two Chinese government-backed chip firms had together hired more than 100 veteran engineers and managers from TSMC. One of the firms was the now-notorious failure Hongxin Semiconductor Manufacturing Company (HSMC), which also hired former TSMC vice president for research and development vice president Chiang Shang-Yi as its chief executive.