Taiwan has officially banned chip exports to Huawei and SMIC, signaling a critical policy alignment with the United States and putting two of China’s biggest tech players in a tighter bind.
The move, backed by Taiwan’s Ministry of Economic Affairs, comes after suspicions that TSMC was tricked into producing AI chiplets for Huawei through third-party shell companies.
TSMC, the world’s top chip foundry, reportedly delivered nearly two billion chiplets – modular components used to build advanced processors – that eventually ended up in Huawei’s Ascend 910B AI chips. These chiplets, smaller and more flexible than traditional monolithic chips, let companies mix and match capabilities like CPU cores, memory controllers, and AI engines using different manufacturing processes. But due to U.S. export laws, any tech containing American IP requires approval before being shipped to Chinese firms on the Entity List – including Huawei and SMIC.
Despite these rules, Huawei sidestepped restrictions using obscure buyers, a tactic that backfired when the U.S. considered slapping TSMC with a $1 billion+ fine. Rather than wait, Taiwan has stepped in, adding its own restrictions to ensure TSMC isn’t caught in a geopolitical crossfire again.
With this new export ban, Taiwan requires firms like TSMC to obtain permits before selling to Huawei or SMIC. The added scrutiny ensures greater government oversight and protects against future deceit. The impact on Huawei and SMIC will be significant: already several generations behind in chipmaking, they now face further delays as their access to even older but precise Taiwanese chip tech gets cut off.
These sanctions have broader implications. Taiwan sees chip technology as not just a business but a matter of national security. Given China’s assertive stance on reunification and its ambitions to build a self-sufficient semiconductor industry, advanced chips could be militarized in any future conflict. That risk is too high for Taiwan to ignore.
Some analysts speculate Taiwan’s move is part of a broader deal with Washington – possibly tied to waiving the potential billion-dollar penalty against TSMC. Whatever the behind-the-scenes negotiations, the result is clear: Taiwan has drawn a line, making sure its most valuable tech assets don’t empower potential adversaries.
1 comment