Taiwan has hit AI companies based in China with an export ban that stops Taiwanese companies from supplying them with technology crucial to their operations.
AI chips are currently being positioned as the backbone of the next wave of global computing and defense technologies. Every disruption in supply chains matters for companies intending to capitalize on this technology, and Taiwan is standing firmly in the way of China’s innovation.
Taiwan rolls out export ban on China
Taiwan has blacklisted Huawei Technologies Co. and Semiconductor Manufacturing International Corp. (SMIC) and restricted both companies’ access to crucial chip-building technologies.
The decision was published by Taiwan’s International Trade Administration. Under the new rules, both Huawei and SMIC, along with several of their subsidiaries in Russia, Japan, and Germany, have been added to an updated “strategic high-tech commodities entity list,” which requires them to have government approval for any Taiwanese company to export goods or technologies to them.
Taiwan’s updated restrictions specifically target the infrastructure and materials necessary for advanced chip production, including plant construction technologies and manufacturing equipment.
According to a Bloomberg report in 2023, this restriction will compromise Huawei and SMIC’s ability to continue developing their network of covert chip plants. The network of chips is located across southern China and has reportedly been receiving support from some Taiwanese companies.
Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s most advanced chipmaker, previously ceased business with Huawei in 2020 in compliance with U.S. export restrictions. Now, the rest of Taiwan’s high-tech industry will be expected to follow suit under domestic law.
This may halt Huawei and SMIC’s efforts to replicate or replace the kind of high-performance chips that Taiwan exports to firms like Nvidia.
Geopolitical tensions disrupt chip markets
In early 2025, Taiwan’s newly inaugurated President, Lai Ching-te, made headlines for describing China as a “foreign hostile force.” Lai’s administration also launched a suite of measures aimed at countering Beijing’s infiltration tactics and its political influence operations on the island.
Beijing has repeatedly asserted that Taiwan is part of its sovereign territory and has refused to rule out the use of force to achieve what it calls a “peaceful reunification.”
It appears that, due to the unlikelihood of outright military conflict in the short term, Taiwan and China are escalating their tensions via the tech industry.
Both Huawei and SMIC have spent years trying to work around the export bans of the United States and its allied countries. In 2023, the companies stunned U.S. lawmakers with a surprise 7-nanometer chip, made entirely in China. But analysts have since questioned the scalability and efficiency of the chip, especially now that the companies lack consistent access to foreign equipment and materials.
Neither Huawei nor SMIC has commented at the time of reporting. The Taiwanese government did not make an official public announcement either. The listing was only revealed through changes posted on an official website.
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