Taiwan Imposes Export Controls on Huawei and SMIC

Taiwanese Export Controls May Hinder AI Chip Development by Huawei and SMIC

Huawei and SMIC, both prominent Chinese technology firms, could face significant obstacles in acquiring the necessary resources for the production of AI chips. This potential disruption stems from newly implemented export controls enacted by Taiwan.

New Restrictions on Strategic High-Tech Commodities

According to reports from Bloomberg, Taiwan’s International Trade Administration has revised its list of entities subject to restrictions on strategic high-tech commodities. Both Huawei and SMIC, along with their affiliated subsidiaries, have been included in this updated designation.

Consequently, Taiwanese companies will now be required to obtain governmental authorization prior to exporting any goods or technologies to either of these Chinese entities.

Impact on Semiconductor Development

The imposed restrictions are expected to limit Huawei and SMIC’s access to crucial Taiwanese technologies related to plant construction. This includes essential materials and specialized equipment.

Bloomberg suggests that this loss of access could substantially impede China’s progress in developing advanced AI semiconductors.

Rationale Behind the Controls

The Taiwanese trade administration released a statement outlining the reasoning for these measures. The addition of over 600 entities, including Huawei and SMIC, from countries such as Russia, Pakistan, Iran, Myanmar, and mainland China, is intended to address national security concerns and counter arms proliferation.

“These actions were taken on June 10th,” the statement clarified, “to proactively combat arms proliferation and safeguard other critical national security interests.”

Potential Consequences

• Reduced access to advanced manufacturing technologies for Huawei and SMIC.
• Possible delays in the development of next-generation AI chips in China.
• Increased scrutiny of technology exports to Chinese companies.