Reacting sharply over cutting the Chinese hegemony over the use of Taiwan's chip technology, Beijing has denounced all of Taiwan's efforts to prevent Chinese companies from poaching talent and stealing chip secrets as a provocative ‘smear', saying this could not prevent interactions between the two sides of the Taiwan Strait.

Earlier this week Taiwan's premier called for the swift passage of revisions to laws mandating tougher punishments to prevent China from stealing its chip technology, saying the threat from the ‘red supply chain' needed an effective deterrence.

Chips made by Taiwan are used in everything from fighter jets to mobile phones, and the government has long worried about Chinese efforts to copy that success, including through economic espionage, poaching talent, and other methods.

China's Taiwan Affairs Office said the island's government had ‘intensified' its efforts to obstruct and undermine exchanges and cooperation. “Recently, they have been deliberately trying to smear and intimidate mainland companies in Taiwan, further escalating cross-strait confrontation and provoking trouble,” Chinese spokesperson Ma Xiaoguang said.

“Such political manipulation cannot hinder the general trend of exchanges and cooperation between compatriots on both sides of the strait, and will only harm the vital interests of Taiwan's business community and compatriots on the island.”

Home to industry giant TSMC and accounting for 92% of the world's most advanced semiconductor manufacturing capacity, Taiwan possesses what China needs – chip expertise in spades.

China has stepped up its military and diplomatic pressure to try and force Taiwan to accept its sovereignty claims. Taiwan's government says only the island's 23 million people can decide their future, and they will defend themselves if attacked.