Taiwan's Commerce Ministry added Chinese chipmakers Huawei Technologies and Semiconductor Manufacturing International Corp to its export control list on Sunday, according to ABC News. The move places these companies alongside organizations like the Taliban and al-Qaeda on the "strategic high-tech commodities" list.

Taiwanese companies must now obtain export permits before selling goods to Huawei and SMIC. Bloomberg confirmed the changes appeared on Taiwan's International Trade Administration website Saturday. Both companies face existing U.S. sanctions and lead China's efforts to develop advanced artificial intelligence chips.

The action comes as trade and technology frictions between Taiwan, China, and the United States continue to escalate. Neither Huawei nor SMIC responded to requests for comment about their inclusion on the list.

Escalating US-China Technology Competition

Huawei and SMIC represent China's most advanced homegrown semiconductor capabilities. Both companies work to compete with U.S.-based Nvidia and supply Chinese tech firms with chips amid export restrictions. Reuters reports that Taiwan is home to TSMC, the world's largest chipmaker and major Nvidia supplier.

Recent reports show Huawei plans mass production of its Ascend 910C AI chip in early 2025. However, production faces significant challenges due to U.S. restrictions on advanced manufacturing technologies. CNBC notes China has called out U.S. export controls as discriminatory restrictions.

U.S. officials estimate Huawei can produce no more than 200,000 advanced AI chips in 2025. The yield rates for SMIC-manufactured chips remain well below industry standards, with reports indicating only 20 percent functional output for the newest processors.

Semiconductor Market and Investment Impact

Taiwan's semiconductor industry generates $115 billion annually, representing 20 percent of the global market. The island controls 50 percent of foundry operations worldwide. Global Taiwan Institute research shows TSMC has avoided financial damage from following U.S. demands due to overwhelming international demand.

Financial institutions face increasing complexity managing sanctions compliance. The expanding list of restricted entities creates new operational challenges for banks and investment firms. European Banking Authority guidelines taking effect December 2025 require stricter compliance structures and annual independent audits.

China has invested at least $150 billion in domestic semiconductor development since export controls began. This includes forming new public-private partnerships and encouraging local sourcing among companies. The investment represents China's largest technology infrastructure project in recent decades.

Global Trade and Strategic Implications

Taiwan's decision reflects growing alignment with U.S. export control policies. Japan and the Netherlands previously implemented similar restrictions on semiconductor manufacturing technologies. The multilateral approach aims to limit China's access to critical technologies that could enhance military capabilities.

The move affects global supply chains beyond semiconductors. Modern electronic devices from smartphones to electric vehicles depend on advanced chips. Center for Strategic and International Studies analysis shows export controls can adversely affect both target countries and implementing nations.

Traditional financial institutions must adapt to new compliance requirements as technology sanctions expand. Banks face rising costs for implementing screening systems and monitoring restricted entity lists. The complexity increases as governments add more companies and expand geographic coverage of restrictions.

China's response includes developing alternative payment systems and financial networks. These efforts aim to reduce dependence on Western financial infrastructure. The broader implications extend beyond technology to reshape global economic relationships and trade patterns.

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