Taiwan blacklists China's Huawei, SMIC; tightens chip export controls amid US-China tensions

In a significant escalation of trade policy, Taiwan has officially added Chinese technology leaders Huawei Technologies and Semiconductor Manufacturing International Corp (SMIC) to its export control list. This decision aligns Taiwan’s trade practices more closely with those of the United States and poses a potential setback for China's ambitions in the development of artificial intelligence chips. The update to Taiwan’s 'Strategic High-Tech Commodities Entity List' was announced by the island's International Trade Administration. Local businesses are now required to secure government approval prior to exporting sensitive technologies, materials, or equipment to Huawei, SMIC, or any of their subsidiaries. According to reports from Bloomberg, this measure could hinder China’s progress in creating advanced AI semiconductors since both companies will lose access to essential technologies and equipment for semiconductor manufacturing from Taiwan. The revised entity list also includes organizations previously linked to global security threats, such as the Taliban and al-Qaeda, along with firms from Iran and China, as highlighted by the Associated Press. Both Huawei and SMIC are already under U.S. government sanctions, facing extensive restrictions that limit their access to advanced chips and manufacturing resources. Taiwan Semiconductor Manufacturing Co (TSMC), the island's largest chipmaker, has consistently complied with U.S. export regulations and has faced heightened scrutiny regarding its interactions with Chinese companies. A notable incident occurred in October 2024 when TechInsights identified a TSMC-made chip in a Huawei AI training card. This discovery led the U.S. Commerce Department to instruct TSMC to cease supplying AI-specific chips to Chinese clients, with the company potentially facing fines of up to $1 billion as a result of this U.S. investigation. In response to these challenges, Huawei has been striving to create its own alternatives to Nvidia's GPU offerings, with the aim of establishing a domestic supply for AI chips. However, analysts suggest that the Chinese tech sector is still grappling with significant hurdles related to scale, technological development, and supply chain issues due to ongoing export restrictions. Taiwan's latest export control measures are particularly timely, given the intensifying geopolitical tensions with Beijing. While China asserts its claim over the self-governing island, the United States continues to act as Taiwan's most significant unofficial ally and arms provider, further complicating the island’s role in the global semiconductor landscape. As the home of TSMC, the world’s leading contract chipmaker and a critical supplier for companies like Nvidia, Taiwan’s regulatory updates underscore its commitment to U.S. policy at a moment when chip technology is at the forefront of the competitive rivalry between Washington and Beijing.