Taiwan has now tightened its technology export regulations, officially adding leading Chinese chipmakers Huawei Technologies and Semiconductor Manufacturing International Corp (SMIC) to its list of controlled entities. Taiwan’s Commerce Ministry revealed the development on Sunday, a step that intensifies the existing friction over trade and technology among Taipei, Beijing, and Washington.
Inclusion on Taiwanâs “strategic high-tech commodities” list means that Taiwanese companies must now obtain specific export permits before conducting any sales with Huawei and SMIC. This measure places these two companies in a category that also includes various organizations and firms from other nations, such as Iran and Russia.
Huawei, based in Shenzhen, and Shanghai-based SMIC are considered key players in Chinaâs goals for breakthroughs in the chip sector, including its goal to produce advanced AI chips. In 2023, these two companies jointly introduced a domestically produced chip, manufactured using a 7-nanometer process, which first appeared in Huaweiâs premium Mate 60 smartphone lines. Both are already under US sanctions, even as they aim to lessen reliance on foreign technology, particularly from the US and bolster local tech firms amidst existing export curbs. Taiwan, as the global hub for semiconductor manufacturing through firms like Taiwan Semiconductor Manufacturing Co. (TSMC) (a major supplier for Nvidia) holds a pivotal position in this tech rivalry as well. In November, the U.S. government instructed TSMC to cease providing specific high-performance semiconductors to clients in mainland China, aligning with a wider strategy to curb Chinaâs acquisition of advanced tech.
These fresh curbs from Taipei are expected to, at the very least, hinder Huawei and SMIC from acquiring vital Taiwanese technology, necessary components, and highly specialized machinery crucial for manufacturing sophisticated AI chips. This includes highly specialized tools necessary for complex chip production, components comparable to those TSMC manufactures for companies like Nvidia Corp. The expanded control list also encompasses several of Huaweiâs overseas subsidiaries, thus broadening the scope of the export limitations. The dual placement of Huawei and SMIC on both Taiwanese and US entity lists severely limits their avenues for acquiring foreign technology. Effectively, this latest measure by Taiwan is likely to slow Chinaâs momentum in developing its own tech, particularly its efforts in AI. The tightened controls also extend to other nations, including Iran, Myanmar, Pakistan, and Russia.
The broader context for these export controls involves the geopolitical relationship between mainland China and Taiwan. Beijing considers Taiwan, which governs itself, to be its territory, and it maintains the option of unifying with the island through military means if it sees fit. The US, while officially maintaining a “one China” policy, remains Taiwan’s most significant unofficial ally and primary supplier of defense capabilities. In recent years, China has faced increasing constraints on its technological development, particularly within the semiconductor sector. Under the previous US administration, more extensive prohibitions were levied on China’s access to chips and components vital for creating AI processors. Despite facing what it describes as “bullying” from the US, China has publicly committed a lot of domestic funding, reportedly $27 billion, specifically to develop its own processors.
