taiwan tightens chip exports to china: a strategic us alignment
taipei, Wednesday, 2 July 2025.
taiwan is increasing its alignment with the united states by tightening semiconductor export controls to china. the move mirrors us restrictions and impacts companies like smic and huawei. taiwanese firms, including tsmc, now require government licenses to export to listed chinese companies. this decision comes amid concerns from us firms that export controls could negatively affect their ai competitiveness. taiwan’s move adds complexity to the global semiconductor landscape, potentially deepening the decoupling of tech ecosystems.
taiwan’s export control update
on june 10, 2025, taiwan’s international trade administration updated its strategic high-tech commodities export control scheme, adding 601 entities, including chinese companies, to the entity list [1]. this update requires taiwanese firms like tsmc to obtain government licenses for exports to listed companies, impacting direct and indirect transactions [1]. the ministry of economic affairs (moea) cited national security and weapons proliferation concerns as the rationale behind the change, urging firms to enhance due diligence [1]. this move aligns taiwan more closely with us export control policies that have been in place since 2018 [1].
china’s semiconductor response
despite us and taiwanese export controls, china is increasing its semiconductor manufacturing capabilities, particularly for ai applications [2]. smic is expanding its capacity in shanghai, shenzhen, and beijing, aiming for nearly 50,000 microchip wafers per month [2] [alert! ‘deadline check needed to confirm status’]. huawei is also expected to benefit from increased chip yields, boosting the production of its ascend 910c chip packages [2]. this expansion is supported by beijing’s reallocation of semiconductor production equipment to domestic companies [2].
us concerns and market impact
us firms, including nvidia and microsoft, have voiced concerns that strict export controls could harm their ai competitiveness [2]. nvidia has criticized the controls, arguing they hinder american technology’s global reach and create opportunities for chinese firms [2]. microsoft suggests these measures may negatively impact us competitiveness in ai more than they help [2]. despite these concerns, us export rules are unlikely to become more lenient toward china soon, according to jefferies [2]. some proponents of strict controls view china’s progress as a reason to increase enforcement efforts [2].
potential shifts in global foundry capacity
yole group predicts that china could become the world’s top semiconductor foundry hub by 2030, holding 30% of global production capacity [7]. in 2024, china’s semiconductor production reached 8.85 million wafers per month, a 15% increase from the previous year, with projections reaching 10.1 million in 2025 [7]. taiwan currently leads with 23% of global capacity, followed by china at 21% [7]. this shift raises questions about the long-term impacts on companies like tsmc, which are navigating a complex landscape of geopolitical pressures and market demands [1].