• >Taiwan escalates tech cold war, adding Huawei and SMIC to its proscribed commodities entity list.
• Taiwanese companies have to obtain government approval before exporting semiconductors to blacklisted Chinese firms.

Taiwan has chosen sides in the escalating tech cold war by adding China’s tech giants Huawei Technologies and Semiconductor Manufacturing International Corp (SMIC) to its export control blacklist. This is most significant expansion of the island’s technology restrictions to date, a move made to coordinate with Washington’s broader strategy to contain Chinese semiconductor advances.

The International Trade Administration of Taiwan updated its strategic high-tech commodities entity list over the weekend, adding 601 entities from multiple countries including Russia, Pakistan, Iran, Myanmar, and China.

The inclusion of Huawei and SMIC represents a demonstration of Taiwan’s positioning in the ongoing tech cold war, placing the Chinese companies alongside organisations like the Taliban and al-Qaeda on the restricted list.

Strategic semiconductor controls take effect

The new restrictions require Taiwanese companies to obtain government approval before exporting any semiconductor technologies, manufacturing equipment, or related materials to the blacklisted entities.

The tech cold war escalation effectively cuts off two of China’s most critical technology champions from accessing Taiwan’s advanced chipmaking ecosystem, which includes world-leading companies like Taiwan Semiconductor Manufacturing Company (TSMC).

Inclusion on the Economy Ministry’s Trade Administration’s strategic high-tech commodities entity list means Taiwanese companies will need government approval before exporting any products to the companies, creating substantial new barriers to Chinese semiconductor development efforts.

The restrictions target Taiwan’s plant construction technologies specifically, materials and equipment essential for building AI semiconductors – capabilities that have been central to both Huawei and SMIC’s efforts to compete with US technology leaders like Nvidia.

Targeting China’s semiconductor champions

The blacklisting targets the two companies that represent China’s best hopes for achieving semiconductor self-sufficiency. Huawei, together with SMIC, shocked American politicians in 2023 by releasing an advanced, made-in-China 7-nanometer chip that powered Huawei’s Mate 60 smartphone series, demonstrating fine technological capabilities despite existing US sanctions.

SMIC, as China’s largest chipmaker, has ramped up investment to expand production capacity and strengthen China’s domestic semiconductor capability in the face of US export controls.

The company has been central to Beijing’s efforts to reduce dependence on foreign semiconductor suppliers, making Taiwan’s restrictions particularly consequential for Chinese technological ambitions.

For Huawei, the restrictions capture not just the parent company but several of its overseas units based in Japan, Russia and Germany, which were also captured in the update to Taiwan’s entity list.

Coordinated policy implementation

Taiwan’s move reflects carefully coordinated timing with US strategic objectives. In a statement on Sunday, the ministry’s trade administration said it had recently held a meeting to review the entity list, and “based on the prevention of arms proliferation and other national security considerations” took the decision to update its list.

The tech cold war positioning comes as both Huawei and SMIC face mounting pressure from American export controls. Huawei and SMIC have both been sanctioned by the US, as the two companies produce China’s most advanced homegrown artificial intelligence chips which compete with US-based Nvidia.

The restrictions add to existing tensions and previous cooperation concerns. In 2023, Bloomberg News reported that several Taiwanese companies were helping Huawei build infrastructure for an under-the-radar network of chip plants in southern China, an example of the complex relationships that these new restrictions aim to sever.

The limited immediate impact expected

Despite the comprehensive nature of the restrictions, analysts suggest the immediate impact may be constrained by existing adaptations. The latest restrictions will tighten existing loopholes and curb collaboration between Chinese firms on the entity list and Taiwanese companies, adding to a series of export bans by the US on mainland tech leaders, according to Ray Wang, a Washington-based semiconductor and tech analyst, in a report in the South China Morning Post.

However, Wang said that he did not expect Taiwan’s latest move to deal a major blow to the companies, as they were already facing significant constraints under existing curbs and had already been struggling with scaling production.

Broader geopolitical implications

Taiwan’s decision to increase export controls demonstrates the island’s strategic value as a technology partner to the United States. The move uses Taiwan’s critical position in global semiconductor supply chains to advance security objectives that align with US strategic interests in containing Chinese technological advancement.

The restrictions also reflect the increasing fragmentation of global technology supply chains along geopolitical lines. As democratic nations coordinate technology export policies, companies worldwide must navigate an increasingly complex regulatory environment where access to critical technologies depends as much on political alignment as market considerations.

Taiwan’s latest tech cold war manoeuvre represents another significant step toward a bifurcated global technology ecosystem, where access to advanced semiconductor technologies increasingly depends on geopolitical positioning rather than purely commercial relationships.

For North American and European companies operating in this environment, Taiwan’s move reinforces the importance of understanding how technology export controls shape competitive dynamics in the semiconductor industry.