Taiwan has arrested four people in an investigation into a Beijing-based bitcoin company for stealthily poaching hundreds of engineers and threatening the island’s all-important semiconductor industry.

Bitmain Technology Ltd was said to have set up two subsidiaries in Taiwan in 2017 to conduct research and development into artificial intelligence chips while hiding their background as mainland-funded entities.

According to the Act Governing Relations between the People of the Taiwan Area and the Mainland Area, businesses from mainland China have to get approval from the Ministry of Economic Affairs in Taipei to invest or set up branches in the self-ruled island.

The ministry also stipulates mainland Chinese semiconductor companies and individuals are not allowed to invest in companies or establish branches in Taiwan that are also into chipmaking.

On Tuesday, the New Taipei District Prosecutors Office raided a number of locations of the two Bitmain subsidiaries and arrested the four people on suspicion of violating the act. It later released the suspects on bail and asked 15 staffers to help with the investigation.

Alarm bells went off among Taiwanese authorities when Bitmain was found to have dangled high salaries, of double the annual remuneration, over the past three years to lure several hundred senior engineers from local blue-chip companies, such as ASE Technology, MediaTek and TSMC. Integrated circuit design engineers were especially targeted.

The poaching of the engineers put Taiwan’s key core technology at risk and threatened the development of the domestic semiconductor industry.

ASE Technology said in reply to media enquiries that it was not involved in poaching talent. MediaTek declined to comment.

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