Taiwan's labor ministry has banned recruitment companies from hiring for jobs in China.

The restriction is aimed at stopping semiconductor staff moving to the mainland to help China's domestic chip production efforts.

Taiwan's TSMC is the world's largest contract manufacturer of semiconductors.

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– Thinkstock / azon1

"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," the ministry said in the notice seen by Nikkei Asia.

Recruitment platforms, headhunters, and agencies (both foreign and domestic) are barred from helping or representing any company to hire individuals for work in China. If they don't stop, they will be fined.

"If the recruitment involves semiconductors and integrated circuits, the penalty will be even higher," the notice said.

Last year, Nikkei reported that more than 100 veteran engineers and managers had been hired from TSMC for two Chinese government-backed chip efforts, Quanxin Integrated Circuit Manufacturing (Jinan), better known as QXIC, and Wuhan Hongxin Semiconductor Manufacturing Co.

In March, Taiwan prosecutors charged Chinese crypto and AI company Bitmain with setting up two front companies to poach TSMC and MediaTek staff.

While Chinese companies are allowed to set up branches in Taiwan, they have to register with the government and are closely monitored. They are also banned from creating research hubs that serve to export semiconductor technology.

Last month, TSMC founder Morris Chang said that “mainland China has given out subsidies to the tune of tens of billions of US dollars over the past 20 years but it is still five years behind TSMC. Its logic chip design capability is still one to two years behind the US and Taiwan. The mainland is still not yet a competitor.”

He also said that the US had advantageous physical resources and environment for semiconductor manufacturing, but lacked "dedicated talent."

Around 90 percent of TSMC's 56,800 employees are based in Taiwan, with around half having doctorates or master's degrees.