The Taiwanese government added Huawei and its main chipmaker, Semiconductor Manufacturing International Corporation (SMIC), to its entity list, barring the island’s firms from doing business with the corporations without a license. Bloomberg has covered the recent updates and quoted Min-yen Chiang, DSET’s Deputy Director of Economic Security, on the policy implications.
According to Bloomberg’s coverage, this was the first time Taiwan has used that blacklist to counter major Chinese firms. Taiwan’s decision may be the first of a series of measures tightening the flow of technology to China, marking a departure from a policy of nurturing cross-Strait business ties. The longer-term goal may be to throttle the supply of the vital components, silicon materials, and plant construction expertise that helped transform Taiwan Semiconductor Manufacturing Co. (TSMC) into the world’s most advanced chip operation.
Min-yen Chiang, DSET’s Deputy Director of Economic Security, commented, “This recent shift marks a substantive move toward strategic technological competition with China.” He also stated that, “Compared to other tech democracies with similar industrial structures — such as Japan and South Korea — Taiwan is now taking a more decisive stance.”
The US has pressured Taiwan to do more since Trump’s first term, when officials urged Taipei to block sales of TSMC chips to China, before Washington imposed restrictions on some of TSMC’s shipments to the world’s second-largest economy. Under the Biden administration, the US continued to ramp up controls against China, spanning from chips and the tools for manufacturing. Bloomberg also quoted anonymous experts, citing that President Trump’s administration has urged Taipei to take more ownership over chip restrictions on China, with a particular focus on the enforcement of existing curbs.
Last year, Huawei purchased 2.9 million AI dies manufactured by TSMC, based on estimates from researchers, routed via an intermediary that has since been sanctioned by the US government and cut off by TSMC, which is cooperating with Washington’s ongoing investigation into the matter.
However, there are still activities that passed Washington’s curbs unnoticed. In DSET’s report “Uncovering Huawei’s Shadow Network: Shenzhen Major Industry Investment Group and Taiwanese Suppliers in China’s Semiconductor Strategy, ” it documented that Huawei, despite U.S. sanctions, still leverages a shadow network to access foreign resources, technologies, and services to expand its semiconductor manufacturing capabilities.
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.
