Executives at Zeiss SMT, which makes indispensable components to build the world’s 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 world’s 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.
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.
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.
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.
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.
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.
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 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 VfB, 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 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@wsj.com, Liza Lin at liza.lin@wsj.com, Heather Somerville at heather.somerville@wsj.com and Kim Mackrael at kim.mackrael@wsj.com
