Two of the most important companies behind China’s semiconductor self-sufficiency and AI supremacy hopes were dealt a blow on Saturday, with their addition to Taiwan’s strategic high-tech commodities entity list. Huawei and SMIC have already been sanctioned by the U.S., but the constriction of supplies from the Silicon Island could prove very meaningful and impactful. This news also comes in the wake of Huawei using shell companies to deceive TSMC into manufacturing two million banned advanced AI compute chiplets for the company. Hopefully, stricter government controls will prevent any similar mistakes in the future.
The move by Taiwan’s democratically elected government, specifically the Taiwan Commerce Ministry, isn’t particularly surprising, given the ongoing trade war sparked by concerns over the weaponization of cutting-edge technologies against Western allies. From now on, both Huawei and SMIC will need to obtain export permits from suppliers based in Taiwan to receive manufactured goods.
As entries on Taiwan’s blacklist, Huawei and SMIC are nestled among entities such as the Taliban and al-Qaeda, as well as a smorgasbord of other companies and organizations hailing from pariah nations like Iran, Russia, Afghanistan, and North Korea. According to sources like Bloomberg and Taiwan’s CNA, neither the newly blacklisted Chinese companies nor Taiwan’s economy ministry has shared comments on the new list.
Back in November, the U.S. requested that TSMC halt supplies of a range of advanced chips to Chinese customers. We also reported on a huge fine being levied upon TSMC for unknowingly supplying Huawei with two million compute chiplets for its Ascend 910-series AI processors. This weekend’s updated entity list might have been precipitated by negotiations about such matters behind closed doors.
Taiwan is home not only to the most famous element of the silicon shield, TSMC, but also to a host of other key semiconductor firms working on everything from materials to advanced packaging. It isn’t just TSMC products that may be cut off from Huawei and SMIC; exports from established industry players, such as UMC, ASE, SPIL, Nanya, and others, will also be subject to the new restrictions.
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