Taipei: Taiwan has officially added two major Chinese companies, Huawei Technologies and Semiconductor Manufacturing International Corp (SMIC), to its export control list. This action places the companies alongside other proscribed organizations such as Al-Qaeda and the Taliban. The move, announced by Taiwan’s economy ministry, means that Taiwanese companies will now need government approval before exporting any products to these two Chinese firms.
Implications for Taiwanese Companies
This decision, which updates Taiwan’s trade administration’s strategic high-tech commodities entity list, signals a further tightening of Taiwan’s controls on the export of critical technology to China. The inclusion of Huawei and SMIC on this list implies that Taiwanese firms, including major players in the semiconductor industry, must seek government permission for exports to these companies. Taiwan is home to TSMC, the world’s largest contract chipmaker, which has a significant role in supplying chips to global companies, including AI leader Nvidia.
Neither Huawei nor Taiwan’s economy ministry commented on the move outside of office hours when the announcement was made on a Saturday.
Background of Huawei and SMIC
Huawei, a global leader in telecommunications equipment and consumer electronics, has been at the center of geopolitical tensions due to its role in China’s AI and 5G ambitions. SMIC, China’s largest semiconductor manufacturer, has also been working to catch up with the world’s leading chipmakers in the high-tech race, particularly in the field of AI and advanced semiconductor manufacturing.
Huawei has been blacklisted by the U.S. Commerce Department, which has restricted its access to American-made technology, including advanced chips. Similarly, Taiwan has already imposed strict export controls on its domestic chipmakers, such as TSMC, preventing them from supplying Chinese companies, especially in sectors deemed critical to national security.
The U.S. and China’s Technology Race
Taiwan’s new export restrictions are seen as part of the broader global technological competition between the U.S. and China. The U.S. has led efforts to restrict Huawei’s access to crucial technologies, including advanced chips, which are essential for Huawei’s 5G networks and AI ambitions. These measures include restrictions on foreign-made chips containing American technology, which affects companies like TSMC.
In October 2024, TechInsights, a Canadian tech research firm, disassembled Huawei’s 910B AI processor and found a TSMC-made chip inside. This processor is considered one of the most advanced AI accelerators ever produced by a Chinese company. The discovery further underlined the dependence of Chinese companies on Taiwan’s semiconductor capabilities. Following this revelation, TSMC suspended shipments to China-based chip designer Sophgo, whose chip matched the one found in Huawei’s 910B.
Additionally, the U.S. Commerce Department in November 2024 ordered TSMC to halt shipments of more chips to Chinese customers, including Huawei, under its ongoing sanctions regime.
Taiwan’s Role in Global Semiconductor Manufacturing
Taiwan’s decision to tighten its export controls adds to the already complex relationship between Taiwan and China. While China claims Taiwan as its territory, Taiwan’s government strongly opposes this assertion and continues to operate independently. Taiwan’s semiconductor industry is crucial not only to the global economy but also to the U.S. and its allies’ security concerns, as advanced chips are vital to everything from AI to military systems.
By restricting the flow of these technologies to China, Taiwan continues to navigate a delicate balance, responding to international pressures while asserting its own economic and security interests. Taiwan’s semiconductor exports are not only pivotal to its economy but also to its standing in the global tech landscape, as its chips are used in devices ranging from smartphones to advanced military technologies.
