Taiwan adds Huawei, SMIC to trade blacklist: Will it hurt China amid amid growing tensions with US?

Taiwan has placed Chinese tech giants Huawei Technologies and Semiconductor Manufacturing International Corp. (SMIC) on a trade blacklist, stepping up restrictions on the firms amid intensifying technological competition between China and the United States.

The island’s Ministry of Economic Affairs updated its Strategic High-Tech Commodities Entity List over the weekend to include Huawei, SMIC and several of their subsidiaries. The move effectively bars the companies from acquiring critical semiconductor technologies from Taiwanese suppliers.

The decision deals another setback to Beijing’s efforts to expand its domestic chipmaking capabilities and compete with US firms such as Nvidia. Huawei and SMIC have already been sanctioned by the United States.

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Ray Wang, a Washington-based semiconductor and tech analyst, said the restrictions would close existing loopholes and limit collaboration between blacklisted Chinese firms and Taiwan’s tech industry. “The new rule from Taipei is more of an effort to further tighten the screws on control measures led by Washington,” South China Morning Post quoted Wang as saying.

Beijing claims Taiwan as its territory and has not ruled out the use of force to achieve unification. The US remains opposed to any forced reunification and continues to provide military support to the island.

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Huawei and SMIC have emerged as central players in China’s drive for self-reliance in chipmaking. The companies introduced a 7-nanometer chip in 2023 that powered Huawei’s high-end Mate 60 smartphone, prompting US officials to review the effectiveness of existing sanctions.

The United States has imposed export bans on various Chinese technology firms and scrutinised the role of Taiwan-based companies in aiding China’s semiconductor development. In 2023, the US Commerce Department ordered Taiwan Semiconductor Manufacturing Co. (TSMC) to restrict advanced processing services for mainland clients, Reuters reported.

TSMC, the world’s largest contract chipmaker, has since tightened shipments to China. That followed a TechInsights investigation revealing a TSMC-manufactured AI chip in a Huawei training card. The company may face a US$1 billion fine in connection with a US probe into that chip, according to Reuters.

Despite the new measures, Wang said the impact on Huawei and SMIC would likely be limited. “These companies were already facing significant constraints under previous curbs and had struggled with scaling up production,” he said.