Taiwan has placed export controls on Chinese companies Huawei, and SMIC, making it difficult for them to access resources required for building AI chips. According to a Bloomberg report, Taiwan’s International Trade Administration placed the two companies and their subsidiaries on an updated list of entities. This means that government approval would be needed for Taiwanese businesses that want to ship anything to either company.
“On June 10, we added some 601 entities from Russia, Pakistan, Iran, Myanmar and mainland China including Huawei and SMIC to the entity list to combat arms proliferation and address other national security concerns,” the trade administration said in a statement. It also said that manufacturers must comply with export control regulations, fulfil their verification obligations and carefully assess transaction risks.
READ: Biden administration to intensify restrictions on China’s access to AI chips (January 14, 2025)
This means that Huawei and SMIC will lose access to Taiwan’s plant construction technologies, materials, and equipment, affecting China’s efforts to develop new AI semiconductors. Taiwan is home to TMSC, the world’s largest contract chipmaker, and a major supplier to Nvidia.
Both Huawei and SMIC have been working hard to catch up in the chip technology race. Taiwan — which China claims to be part of its territory, despite the strong objections of the Taiwanese government — already has strict export controls for companies either manufacturing in the country or supplying Chinese firms. Huawei is on a U.S. Commerce Department trade list that essentially bars it from receiving U.S. goods and technology, as well as foreign-made goods such as chips from companies like TSMC made with U.S. technology.
In October 2024, a Canadian tech research firm TechInsights found a TSMC chip in Huawei’s 910B AI processor. The multi-chip 910B is viewed as the most advanced AI accelerator mass-produced by a Chinese company. TSMC suspended shipments to China-based chip designer Sophgo, whose chip matched the one in the Huawei 910B, and in November the U.S. Commerce Department ordered TSMC to halt shipments of more chips to Chinese customers.
The Taiwanese government has also repeatedly vowed to crack down on what it says are efforts by Chinese companies including SMIC to steal technology and entice chip talent away from Taiwan. SMIC is China’s largest chipmaker and has ramped up investment to expand production capacity and strengthen China’s domestic semiconductor capability in the face of U.S. export controls.
TMSC also recently revealed plans to invest $100 billion into bolstering chip manufacturing in the U.S. President Donald Trump called this investment a “tremendous move by the most powerful company in the world.” The new capital brings TSMC’s total investment in the U.S. to $165 billion and will go toward building five new fabrication facilities in Arizona. The company has also reportedly proposed a joint venture with Nvidia, Advanced Micro Devices (AMD), and Broadcom (AVGO) to operate Intel’s semiconductor foundries.