Taiwan blacklists China's Huawei and SMIC, further aligning with U.S. trade policy

In a significant move reflecting its alignment with U.S. trade policies, Taiwan has placed China’s tech giants Huawei and SMIC on its trade blacklist. This decision comes against a backdrop of escalating tensions with Beijing and aims to fortify domestic regulations concerning high-tech exports. The International Trade Administration of Taiwan has officially included Huawei and SMIC in its 'Strategic High-Tech Commodities Entity List,' which encompasses various subsidiaries of these companies. Under current Taiwanese regulations, firms must secure licenses from authorities before exporting products to entities listed on this blacklist. Both Huawei and SMIC are major players in the semiconductor sector and have previously faced similar sanctions from the United States, following stringent controls on advanced chip technologies. Companies like Taiwan Semiconductor Manufacturing Company (TSMC) have already adapted to U.S. export restrictions, demonstrating their compliance with international trade regulations. Ray Wang, an independent analyst focused on semiconductors and technology, noted that Taiwan's action is likely aimed at tightening existing loopholes and reinforcing the overarching policy framework. He added that these new export controls could intensify penalties for any potential violations. TSMC found itself in hot water last October when semiconductor research firm TechInsights identified a TSMC-manufactured chip in a Huawei AI training card. This revelation prompted the U.S. Commerce Department to instruct TSMC to cease sales of chips used for AI applications to Chinese clients. Reports indicate that TSMC may face a substantial $1 billion penalty to resolve a U.S. investigation related to this incident. Despite facing obstacles due to export restrictions and a relatively undeveloped domestic chip ecosystem, Huawei has been striving to develop alternatives to Nvidia’s GPUs for AI applications. Experts, however, suggest that the company's progress has been significantly hindered. Previously, Huawei managed to secure several million GPU dies from TSMC for its Ascend chip design by exploiting existing loopholes, as explained by Paul Triolo, a senior vice president at DGA-Albright Stonebridge Group. This latest crackdown on Huawei and SMIC by the Taiwanese government is set against the backdrop of rising geopolitical strife with Mainland China, which considers Taiwan a breakaway province. In April, the U.S. reiterated its backing of Taiwan's status quo as China conducted extensive military drills near the island. Recently, Wang Huning, a senior political advisor in China, called for efforts to promote national reunification with Taiwan and voiced strong opposition to any movements toward Taiwanese independence.