Taiwan has recently implemented new export controls focused on mainland China. These new controls zero in on big technology companies such as Huawei and China’s Semiconductor Manufacturing International Corporation (SMIC). This action seeks to bring the U.S. sanctions against China into alignment. It would further seek to limit the movement of key materials used to manufacture new semiconductor types like artificial intelligence (AI) chips. The decision comes at a moment when Taiwan is known as the world’s preeminent supplier of these critical elements.
The Taiwanese government recently rolled out a new mandate on enterprises. They now have to receive approval, in advance, of shipment of component/remedial services to identified companies/countries. This proliferation list takes into account not only the actions by China, but areas like Iran, Myanmar, Pakistan, and Russia. Taiwan is implementing new export controls to back up U.S. sanctions. This decision comes in response to a third-party report accusing Taiwanese Semiconductor Manufacturing Company (TSMC) of assisting Huawei and SMIC in the development of AI technologies.
Impact on China’s Technology Development
China’s meteoric technological rise has been slowed for decades by export controls imposed by the United States and its allies and partners. Taiwan’s most recent step to derail China’s advancements are poised to make a major impact. This is particularly true in the fast-paced area of AI technologies. In direct response, China has set aside $27 billion to developing their own advanced processors and leapfrog American technology. It is up against profound challenges due to increasing repression.
The U.S. government recently undertook to impose an even broader ban on China. This restriction made it impossible to access chips and components necessary to transform AI processors. Under former President Joe Biden’s administration, these sanctions were implemented, placing firms such as SMIC under extreme constraints. The impact of Taiwan’s new export controls will likely exacerbate China’s challenges in achieving self-sufficiency in technology.
TSMC Under Scrutiny
Taiwan’s TSMC has come under scrutiny after being accused of violating U.S. sanctions by allegedly aiding Huawei and SMIC in their ventures. Just last year, the U.S. initiated an impressive probe into TSMC’s anti-competitive practices. This shifting of the goalposts sparked alarm at TSMC’s apparent concession to Chinese tech companies’ efforts to acquire advanced technology.
The allegations go further to imply that TSMC played a critical role in achieving these companies’ success in developing smartphones and AI chips. The inquiry has placed immense pressure on TSMC. They will need to make sure they’re keeping up with new international guidelines and reassess their relationships with Chinese companies. Together with Taiwan’s own recent export controls, these new restrictions send a powerful message of resolve from Taipei to continue enforcing compliance with U.S. policy.
Broader Implications
The impact of Taiwan’s new export controls reaches farther than just China. Additionally, the ban will extend to countries such as Iran, Myanmar, Pakistan, and Russia from buying critical tech parts—from semiconductors all the way down to chips—from Taiwan. This transition marks a unique trend towards greater democracy by nations. They are increasing scrutiny on exports to defend their national security interests and stop the proliferation of advanced technologies.
In light of recent harmful shipments to entities that threaten global security, the new regulations reaffirm the importance of denying approval of those shipments. Taiwanese officials have expressed their commitment to maintaining compliance with international standards while supporting local businesses in navigating these new requirements.
