Taiwan blacklists Huawei, chipmaker SMIC
Taiwan joined a yearslong US push to slow China’s technological rise by blacklisting its AI and chipmaking leaders, an extraordinary move that may foreshadow a resurgence of efforts to isolate its powerful neighbor’s semiconductor sector. Huawei Technologies Co. and its principal chipmaker Semiconductor Manufacturing International Corp. were added to Taipei’s entity list last month, banning dealings with them without a license. It was the first time Taiwanese officials utilized that blacklist to censure large Chinese enterprises, following a longtime US policy of barring breakthrough technologies.
Taipei’s first public action on semiconductor limitations since President Lai Ching-te committed in April to address vague Washington export control concerns. The Trump administration has encouraged Taipei to take greater responsibility for putting limitations on China, particularly in enforcing existing curbs, sources said. They requested anonymity since they couldn’t speak publicly.
After Taipei’s move, a congressional committee on China said the US “must continue working with our partners to ensure the CCP’s attempts to illegally transfer tech are stopped cold.”
Taiwan may be the first to tighten technology flow to China, reversing its policy of fostering cross-Strait commercial links. Long-term, Taiwan Semiconductor Manufacturing Co. may reduce supply of critical components, silicon materials, and plant construction knowledge that helped it become the world’s most advanced chip operation. “This recent shift marks a substantive move toward strategic technological competition with China,” said Taiwan’s government-funded Research Institute for Democracy, Society, and Emerging Technology expert Chiang Min-yen. Taiwan has taken a more assertive approach than other tech democracies with similar industrial structures like Japan and South Korea.
In April, Lai suggested a larger approach to improve economic relations with the US rather than addressing US complaints. The Huawei and SMIC sanctions may be related to tariff negotiations with Washington or demanded by the US. The US Department of Commerce, White House, and Taiwan’s Office of Trade Negotiations declined comment. “The DPP authorities’ kneeling and ingratiating themselves with the US will only hurt and ruin Taiwan’s interests,” Foreign Ministry spokesman Guo Jiakun told a Beijing press briefing. China opposes the US politicizing tech and trade concerns, overstretching national security, misusing export control and long-arm jurisdiction, and purposefully blocking and oppressing China.
The US has encouraged Taiwan to ban sales of TSMC semiconductors to China since Trump’s first term, before Washington restricted some of TSMC’s shipments to China. The US increased China regulations on chips and their manufacturing tools under President Joe Biden. Many US measures employ the foreign direct product rule to restrict foreign enterprises, particularly Taiwanese ones, whose products incorporate even a little American tech. Administration official: The White House will support whatever measures its allies adopt to prevent control circumvention. President Trump and his predecessor have prioritized ensuring Taipei cracks down on TSMC shipments that are forbidden under US law, according to sources who requested anonymity.
Researchers believe that TSMC, Apple Inc. and Nvidia Corp.’s chipmaker, accidentally produced 2.9 million Huawei AI dies last year. An middleman sanctioned by the US government and cut off by TSMC, which is cooperating with Washington’s probe, routed those semiconductors. Construction contracts and component sales are among the other business activities not covered by Washington’s limits. Bloomberg News reported in 2023 that numerous Taiwanese companies were helping Huawei create infrastructure for an under-the-radar chip factory network in southern China.
Taiwanese officials indicated they will investigate those companies soon, but they haven’t till now. Beijing’s neighbors, who still view China as a key trading partner, rarely target its top enterprises. Japan backed a US-led drive to block China’s access to advanced chipmaking equipment, but neither Tokyo nor Seoul has banned Huawei or SMIC. Taiwan’s entity list action doesn’t affect mainland-registered operations, thus it doesn’t disrupt business. Over the years, several Taiwanese enterprises have established local subsidiaries in mainland China, which Taipei does not regulate.
“I don’t expect this announcement will cause any material impact for either Taiwan or Huawei and SMIC,” said Bloomberg Intelligence analyst Steven Tseng. After all these years, Huawei and SMIC should have created a reasonable amount of ‘local sourcing’ in China, so they don’t actually rely on Taiwan.”
The signal Lai sends matters. The new administration is reducing China-Taiwan economic reliance. Over the weekend, his Democratic Progressive Party issued a film urging Taiwanese enterprises to diversify away from China, a change from decades of dominant mainland involvement. Foxconn developed the world’s largest iPhone production campus in central China, while TSMC makes chips in Shanghai and Nanjing. Tensions rose after Lai’s election last year. He is accused by Beijing of wanting independence and destabilizing the region. Lai first called China a “foreign hostile force” and announced broad counterinfiltration measures, straining bilateral relations. China says the self-governing democracy is its territory and vows to unify with Taiwan by force, which Taiwan refuses.
Taiwan invested $14.6 billion in China in 2010, but only $3.6 billion last year. “Thanks to global changes, Lai can now speed up his agenda-setting against China on several fronts including defense, trade, and tech,” said Soong Hseik-wen, head of the Center for National Policy Research at National Chung Cheng University.
