• Taiwan adds semiconductor export controls by blacklisting Huawei and SMIC.
• 599 other entities on the strategic high-tech commodities entity list.
• In line with US-led restrictions, and isolates China’s leading chipmakers from Taiwan semiconductors.

Taiwan has intensified its semiconductor export controls by adding China’s tech giants Huawei Technologies and Semiconductor Manufacturing International Corp (SMIC) to its strategic high-tech commodities entity list, marking an escalation in the ongoing US-China tech rivalry that positions the self-governed island firmly alongside Washington’s technological containment strategy.

The International Trade Administration of Taiwan added Huawei, SMIC and a host of their subsidiaries to a trade blacklist, according to the updated list published by the island’s Ministry of Economic Affairs on its website on Saturday.

A total of 601 entities were added, including Huawei and SMIC, along with entities from Russia, Pakistan, Iran, Myanmar, and China, placing the Chinese semiconductor companies alongside organisations like the Taliban and al-Qaeda on the same restricted list.

The new semiconductor export controls effectively require Taiwanese companies to obtain government approval before shipping any products to the blacklisted entities. The development significantly tightens access to Taiwan’s advanced chipmaking technologies, materials, and equipment that are essential for building AI semiconductors – technologies that have been central to both companies’ efforts to compete with US giants like Nvidia.

Strategic implications for China’s chip ambitions

The timing of these semiconductor export controls is particularly significant given Huawei and SMIC’s recent technological breakthroughs.

Huawei, together with SMIC, shocked American politicians in 2023 by releasing an advanced, made-in-China 7-nanometer chip that powered Huawei’s Mate 60 smartphone series, demonstrating China’s unexpected progress in domestic chip manufacturing despite US sanctions.

The latest restrictions would further tighten existing loopholes and curb collaboration between Chinese firms on the entity list and Taiwanese companies, adding to a series of export bans by the US on mainland tech leaders, Ray Wang, a Washington-based semiconductor and tech analyst, told the South China Morning Post.

However, Wang noted that he did not expect Taiwan’s latest move to deal a major blow to the companies, as they were already facing significant constraints under previous curbs and had struggled with scaling up production.

Taiwan’s position in the global chip war

Taiwan’s decision to implement semiconductor export controls reflects its important position in the global technology supply chain. The island is home to Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker and a major supplier to AI leader Nvidia.

The dominance in advanced chip manufacturing gives Taiwan significant leverage in determining which companies can access cutting-edge semiconductor technologies. The new restrictions build on existing tensions between Taiwan and China.

Those tensions stepped up a notch earlier this year after Taiwan President Lai Ching-te labelled China a “foreign hostile force” and unveiled wide-ranging measures to counter infiltration efforts.

The semiconductor export controls represent another layer in Taiwan’s efforts to protect its technological advantages.

Impact on global tech supply chains

The blacklisting comes as both Huawei and SMIC face mounting pressure from US export controls. Both companies have both been sanctioned by the US, with the two producing China’s most advanced homegrown AI chips to compete with the US-based Nvidia and supply Chinese tech firms with much-needed chips.

Taiwanese TSMC has been under scrutiny from US authorities. The company reportedly faces potential penalties after a TSMC-made AI chip was discovered in a Huawei AI processor, leading to investigations by the US Commerce Department. The incident highlighted concerns about workarounds in existing export control regimes.

The technology cold war deepens?

Taiwan’s implementation of semiconductor export controls signals a further hardening of technological boundaries between democratic allies and China.

In a statement on Sunday, the ministry’s trade administration said it had recently held a meeting to review the entity list, and, “based on the prevention of arms proliferation and other national security considerations,” updated it.

The move effectively cuts off two of China’s most important technology champions from accessing Taiwan’s semiconductor ecosystem. While both companies have demonstrated resilience in developing domestic alternatives, the new restrictions will likely force them to rely even more heavily on indigenous capabilities and alternative supply chains.

As the global technology landscape continues to fragment along geopolitical lines, Taiwan’s latest semiconductor export controls underscore the island’s strategic importance in determining the future of global chip supply chains.

The decision reflects not just economic considerations, but also the broader security calculus that is increasingly shaping international technology relations. The full impact of the restrictions will likely become clearer as affected companies adapt their supply chain strategies in response to this latest escalation in the ongoing technology rivalry.