On June 10, Taiwan’s International Trade Administration under the Ministry of Economic Affairs added 601 entities, including Chinese companies such as Huawei and Semiconductor Manufacturing International Corporation (SMIC), to its export control list. The move was covered by international media outlets including CNN and Deutsche Welle (DW), cited comments from Min-yen Chiang, deputy director of the Economic Security Program at DSET, as well as research findings from DSET’s policy report “Uncovering Huawei’s Shadow Network: Shenzhen Major Industry Investment Group and Taiwanese Suppliers in China’s Semiconductor Strategy,” written by policy analyst Tsai-Yi Wang and Min-yen Chiang.
CNN noted that the new regulation comes amid escalating tensions in U.S.-China competition over advanced technologies and signals closer Taiwan-U.S. cooperation in reinforcing the technological sanctions against Beijing. Taiwan Semiconductor Manufacturing Company (TSMC) had previously supplied chips to Huawei until the U.S. Trump administration imposed a ban in 2020, prompting Huawei to shift its sourcing strategy to SMIC. CNN also quoted multiple experts, stating that, under the current U.S. restrictions, Taiwan’s additional controls on exports to Huawei, SMIC, and their subsidiaries would only carry symbolic weight.
Min-yen Chiang, deputy director of the Economic Security Program, stated, “This reflects the Taiwanese government’s clearer intent to align its export control regulations more closely with those of the United States. Taiwan is the second country in the world, after the US, to publicly place SMIC and Huawei on an export control list.” He further explained that, Taiwan’s “proactive” step signals that the government recognizes the need to play an active role in cooperating with the American government and addressing the security concerns at stake. “The US government has long hoped that Taiwan would take greater initiative in regulating sensitive exports on its own, rather than simply following Washington’s lead,” he added.
Deutsche Welle reported that while Huawei and SMIC were added to the U.S. Department of Commerce’s Entity List in 2019 and 2020 due to national security risks and their connection to China’s military-civil fusion strategy, Taiwanese companies remained subject to U.S. export restrictions due to their reliance on U.S. technology in chip design and manufacturing. However, in 2024, Huawei was reportedly still able to procure TSMC chips via intermediary Chinese firms and use them in its advanced AI processors, the “Ascend 910” series. Furthermore, several Taiwanese companies and their subsidiaries were found to be assisting Huawei affiliates in constructing semiconductor fabrication plants and engaging in other forms of cooperation, forming a “shadow supply chain” to circumvent U.S. sanctions.
DW cited DSET’s report in detailing the operational mechanisms of the “shadow supply chain.” Shenzhen-based state-owned investment groups established multiple so-called “startups,” such as PXW Semiconductor Manufactory Co., Ltd. and SwaySure Technology Co., Ltd., which then contacted Taiwanese suppliers under new identities to evade U.S. export restrictions and integrate Taiwan’s semiconductor industry into China’s national semiconductor development strategy.
The report stated, “Although Taiwan has implemented investment screening measures to restrict the establishment of semiconductor fabrication plants in China—successfully safeguarding its industrial competitiveness—the high complexity of the semiconductor production network limits the effectiveness of existing reviews in covering all suppliers.”
The full implications of Taiwan’s export control measures and potential responses from Chinese firms warrant continued observation. DSET will soon release a policy report analyzing China’s industrial strategy in the semiconductor sector, including how the government uses subsidies to integrate legacy chip supply chains, aiming to enhance Chinese corporations’ global competitiveness.
DSET remains committed to monitoring policy responses from the Chinese government regarding Taiwan’s export controls, gaining deeper insights into how geopolitics shapes global supply chains, and offering actionable policy recommendations to protect the semiconductor industry from the adverse effects of China’s state-driven development model.
