Taiwan plans to impose tougher restrictions on exports of AI chips and servers to China, a move that would make illegal shipments of the technology a criminal offense under Taiwanese law.
The proposed rules would bring Taiwan’s export policies closer to those of the U.S., which has restricted exports of advanced AI processors to China since 2022, citing concerns that the chips could support Chinese military development.
Taiwan’s Minister of Economic Affairs Kung Ming-hsin said the government will expand its list of controlled technologies to include advanced semiconductors and AI servers. He said the changes are part of the commitments made under the Agreement on Reciprocal Trade signed by Taiwan and the U.S. this year. The new regulations would allow prosecutors to pursue criminal charges under Taiwan’s Foreign Trade Act. He did not provide a start date for the restrictions.
The policy would address a big gap in Taiwan’s enforcement capabilities. Although the country requires export permits for certain advanced technologies, its existing laws do not specifically criminalize unauthorized exports of advanced AI hardware to China.
This distinction has complicated efforts to prosecute suspected smugglers, even when shipments clearly appear designed to evade U.S. restrictions.
In August, Taiwanese prosecutors indicted nine individuals in a case involving 130 AI servers. Authorities alleged that 74 of the servers were shipped to China through intermediary countries using falsified documents. Prosecutors relied on charges including document forgery and breach of trust because existing Taiwanese export laws did not provide a specific criminal offense covering the shipments.
But these restrictions haven’t prevented Chinese companies from obtaining some high-performance chips. U.S. officials have alleged that billions of dollars in NVIDIA hardware have reached China through unauthorized distribution networks.
For Taiwan, the tougher regulations will likely have more impact because of its leading position in semiconductor manufacturing. Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, produces processors for NVIDIA and other leading tech companies. Its manufacturing capabilities make Taiwan central to the global supply of hardware used for AI training and inference.
TSMC is also expanding its US operations, with plans to invest $265 billion in American semiconductor manufacturing. The investment supports Washington’s effort to establish more domestic production capacity for next-gen chips. For Taiwan, the combination of export restrictions and US manufacturing investment reflects two connected priorities: protecting advanced chip technology and maintaining its economic relationship with Washington.
Continued Strong Demand
The company is separately discussing a potential manufacturing relationship with Elon Musk’s Terafab project, although the two sides have not announced an agreement. TSMC CEO C.C. Wei confirmed that discussions remain underway and emphasized that TSMC would need operational control of any manufacturing facility it runs.
The chipmaker’s latest financial results underscore the scale of demand for advanced semiconductors. TSMC reported a 51% increase in third-quarter revenue and projected 61% sales growth for the following quarter.
Strong results from both Samsung Electronics and ASML have added to evidence that major semiconductor suppliers continue to benefit from AI infrastructure spending.
