TAIPEI In mid-October, No. 1 Chinese contract chipmaker Semiconductor Manufacturing International Co. appointed Liang Mong-song, a Taiwanese chip veteran, as its co-chief executive. Analysts and industry insiders say the high-profile move is the latest -- and unlikely to be the last -- instance of China luring Taiwanese experts to help build up its domestic chip capabilities.

Boosting its semiconductor prowess to reduce dependence on foreign technology is a key priority for China, particularly as Washington steps up its efforts to block Chinese acquisitions of Western tech companies, such as Lattice Semiconductor and Aixtron.

Liang, 65, worked at Taiwan Semiconductor Manufacturing Co., the world's No.1 contract chipmaker by revenue and market share, before moving to Samsung Electronics' system large-scale integration division, which churns out core and graphic processors, and modems.

Former TSMC and Samsung executive Liang Mong-Song joined SMIC in October as its new co-CEO.

Liang, who was at TSMC from 1992 to 2009, was sued by the Taiwanese company for leaking trade secrets to Samsung. In 2015, TSMC won its lawsuit and Liang was banned from working for Samsung for a certain period.

"Liang was special because he was one of TSMC's key insiders in the research and development field when he left for Samsung, TSMC's biggest rival [for] orders from Apple and Qualcomm," a former TSMC executive told the Nikkei Asian Review.

Market watchers believe that Liang helped Samsung develop its 28-nanometer and 14-nanometer technologies. The smaller the nanometer size, the more advanced the chips -- but also the more expensive and challenging they are to develop. Core processors used in the iPhone X employ TSMC's 10-nanometer process technology.

Liang also helped the South Korean conglomerate secure orders from Qualcomm for high-end mobile chips and win back some orders to make Apple iPhone's core processor chips in 2015.

Apple and Qualcomm are TSMC's two biggest customers, accounting for a total of 28% of its revenue in 2016. TSMC and Samsung have long been locked in a battle to win orders from the two U.S. companies.

SMIC, whose most advanced chips are 28 nanometers, is nowhere near TSMC and Samsung in terms of technological capabilities. It currently supplies chips mostly for entry-level Chinese smartphones and other electronics.

According to Clark Tseng, an analyst at semiconductor industry association SEMI, Liang's appointment means the Chinese chipmaker finally has an executive with experience working at the world's top semiconductor companies.

Lin Jian-Hong, an analyst at Taipei-based Topology Research Institute, said Liang could help SMIC avoid making mistakes in its technological buildout. "Taiwanese talent could be the main target for headhunting thanks to similar cultural backgrounds, especially over the next two to three years when China is still aggressively investing and expanding its semiconductor industry," Lin said.

Over the last two years, several other high-profile Taiwanese executives have also been snatched up by Chinese companies. Chiang Shang-yi, a former TSMC co-chief operating officer, was invited to sit on SMIC's board as nonexecutive director. Former President Charles Kau of memory chipmaker Nanya Technology and former CEO Sun Shih-wei of United Microelectronics Corp. left to join China's government-backed Tsinghua Unigroup.

CATCHING UP SMIC's two major shareholders, controlling a combined 33.07%, are state-backed Datang Telecom Technology & Industry Holdings and National Integrated Circuit Industry Investment Fund, the country's primary semiconductor investment vehicle. SMIC is in turn the largest stakeholder of China's biggest chip assembler, Jiangsu Changjiang Electronics Technology.

Though SMIC's capital expenditure of $2.3 billion for 2017 still trails TSMC's $10.8 billion, it outstrips spending by other competitors, such as U.S.-based Globalfoundries and Taiwan's UMC, the world's No. 2 and No. 3 contract chipmakers, respectively.

SMIC's $2.9 billion revenue in 2016 was only one-tenth that of TSMC's and its net profit of $377 million was an even smaller fraction of its Taiwanese counterpart's, but it has been closing in on UMC and Globalfoundries in recent years.

For instance, Qualcomm has transferred orders for mid-range and low-end smartphone chips from UMC to SMIC this year. In 2015, there was also speculation that SMIC tried to buy out Globalfoundries.

Roger Sheng, an analyst at research consultancy Gartner, said many signs show that SMIC will expand in a decisive and sweeping manner in the next few years as Beijing pursues its "Made in China 2025" policy directive. One of the government's goals is to raise domestic production of core technology components and materials to 40% of domestic demand by 2020 and 70% by 2025.

China imported more than $220 billion worth of semiconductor-related products in 2016, more than it spends on oil imports each year. "On China's way to increase its own local supply, it is for sure that Chinese companies would continue poaching chip specialists with very competitive salary packages," Sheng said, adding that the country still faces a serious shortage of capable engineers.

According to SEMI, a total of 62 new semiconductor plants or lines will begin production around the world between 2017 and 2020 -- with 26, or 42% of them, in China. This growth is partly backed by heavy investments from foreign chip makers such as Intel, Samsung and SK Hynix to better serve China's booming market.

In terms of domestic investments, Tsinghua Unigroup plans to construct massive memory chip plants in Wuhan, Nanjing, Chengdu and Shenzhen. SMIC and smaller peer Shanghai Huali Microelectronics will also expand to build chip facilities in Shanghai that are slated to begin production no later than 2019.

All of these new plants, however, could eventually cause a supply glut, warned Topology's Lin. "It's very likely that there will be supply-demand imbalance in some segments within two years."

But while no one is sure whether China's huge investments in the sector will pay off, there are no signs that the spending will let up in the near future.

"To bring in an executive like SMIC's Liang -- it's like asking an MLB player to coach middle-school students," a Taiwanese chip industry executive said. "It will really take time for China to pick up, but their relentless efforts will definitely first cause some disruptions and tensions in human resources."

Nikkei staff writer Debby Wu in Taipei contributed to this report.