Taiwan is cracking down on Chinese tech companies operating on the island without permission, bad news for mainland chip firms using quiet local offices to hire Taiwanese engineers.

• Taipei prosecutors charged the Taiwan manager of Chinese chipmaker Longxun Semiconductor with running an unapproved operation on the island.
• The company shut its licensed Taipei office years ago, then kept doing business anyway, renting space in central Taipei and hiring high-tech engineers.
• The Taiwan arm did chip research, testing, and technical support, pulling in tens of millions of yuan a year.
• Prosecutors are asking for prison time for the local manager, and Longxun's chairman in China is now wanted.

Outlook: Expect more cases like this as Taiwan tightens enforcement against Chinese firms poaching its chip talent.