Taiwan is considering aligning itself with the US by restricting the sale of AI chips not only to companies on export blacklists like Huawei, but also to 'all Chinese customers.'

Taiwanese authorities are reportedly considering imposing stricter restrictions on the sale of AI chips to China in line with US export controls on China. The proposed new regulations could target all Chinese customers, not just companies already on export ban lists like Huawei and SMIC, and aim to make the smuggling of AI chips and servers subject to criminal penalties in Taiwan for the first time.

Taiwan weighs criminal ban on AI chip exports to all of China — stricter measures beyond blacklisted firms would make smuggling servers a crime | Tom's Hardware
https://www.tomshardware.com/tech-industry/taiwan-weighs-criminal-ban-on-ai-chip-exports-to-all-of-china-as-us-trade-talks-continue

Taiwan Weighs Tighter AI Chip Export Controls Targeting China to Align with US - Bloomberg
https://www.bloomberg.com/news/articles/2026-06-09/taiwan-mulls-curbs-on-ai-chip-exports-to-china-to-align-with-us

According to Bloomberg, this proposal is being considered as part of trade negotiations with the United States, and Taiwan is adjusting its stance to restrict the sale of AI chips with a certain level of processing power to China, in accordance with U.S. standards. However, it has not yet been decided to what extent Taiwan will adopt U.S. policy, and the final details are expected to be decided after confirmation by high-ranking officials from both Taiwan and the United States.

As of the time of writing, Taiwan does not consider the unauthorized export of AI chips to China to be a crime. Therefore, while Taiwanese authorities can warn vendors that their actions 'may violate U.S. regulations,' prosecuting them in Taiwan would require relying on other existing laws, such as those concerning document forgery.

These new regulations were put in place after suspicions arose that AI servers equipped with NVIDIA chips were being rerouted from Taiwan to China. In May 2026, three people were arrested on suspicion of smuggling approximately 50 NVIDIA-equipped servers, but the charges applied were for document forgery, not violations of export controls.

Three men arrested by Taiwanese authorities for attempting to smuggle NVIDIA GPUs into China via Japan - GIGAZINE

In June 2025, Taiwan blacklisted Huawei and SMIC, China's largest semiconductor manufacturer, requiring Taiwanese companies to obtain government permission to do business with them. However, this restriction did not target the entire Chinese market, leaving room for AI chips and servers to flow to Chinese customers other than Huawei and SMIC.

Taiwan bans chip exports to Huawei and SMIC, possibly because Huawei deceived TSMC into manufacturing 2 million AI processors, ignoring US regulations - GIGAZINE

The United States uses performance metrics such as 'Total Processing Performance' in ECCN 3A090 to determine which AI accelerators are subject to export restrictions. If Taiwan adopts a similar performance standard, it will clearly define the threshold above which AI servers assembled in Taiwan will not be able to be shipped to mainland China.

This distinction is important because Taiwan plays a significant role in the global AI server manufacturing. Foxconn is said to hold approximately 40% of the global AI server market, and Taiwanese companies such as Quanta, Wistron, Wiwynn, and Inventec also integrate NVIDIA and AMD accelerators into rack-sized AI servers and ship them to data centers around the world.

In other words, even if TSMC's chip manufacturing for Chinese customers is already restricted, if AI servers assembled in Taiwan are later exported to China, it could create a loophole in the regulations. Taiwan's new regulations are not only aimed at the chips themselves, but also at directly cracking down on the movement of completed AI servers.

Taiwan's Ministry of Economic Affairs told Bloomberg that it will strengthen oversight of 'strategic high-tech products' and improve their alignment with international export controls. It also stated that Taiwan and the United States are continuing discussions on including advanced chips in the list of regulated products.

On the other hand, semiconductors are an extremely important industry for Taiwan in terms of both economy and national security, and strengthening regulations requires careful consideration. Taiwan's Foreign Minister Lin Chia-lung has previously stated that he does not want semiconductors to be weaponized, and there are concerns within the Taiwanese government that strengthening restrictions against China too much could also affect domestic industries.

Pressure is also mounting in the United States to prevent AI chips from being leaked to China. Republican Senator Jim Banks and Democratic Senator Andy Kim have called on the Commerce Department's Bureau of Industry and Security to close loopholes that allow contract semiconductor manufacturers like TSMC to produce advanced AI chips for overseas subsidiaries of Chinese companies.

The U.S. Department of Commerce's Bureau of Industry and Security has clarified that licenses are required for Chinese companies to sell to subsidiaries in third countries such as Malaysia. However, experts point out that 'the channels through which Chinese front companies can order custom chips from contract manufacturers like TSMC are not sufficiently blocked.'

Furthermore, Senator Elizabeth Warren asked NVIDIA CEO Jensen Huang to testify before the Senate Banking Committee about the sale of AI chips to China and compliance with export controls. Huang declined to testify and instead proposed inviting Warren and committee members to NVIDIA headquarters to explain the company's technology and the American AI ecosystem.

Warren has raised concerns that NVIDIA chips, designed for AI training and inference, could be repurposed for military use in China. In response, CEO Huang has argued that restricting NVIDIA's sales to China would have little effect on slowing down China's AI development and would instead undermine the competitiveness of American companies.

China is also taking steps to reduce its reliance on American-made AI chips. According to a report citing Bloomberg, China is considering a plan to invest approximately $295 billion (approximately 47.3 trillion yen) over the next five years to build a nationwide AI data center network.

This plan, spearheaded by the National Development and Reform Commission, envisions consolidating China's dispersed computing facilities into a connected network by 2028. Many of the data centers will be operated by state-owned telecommunications companies such as China Mobile and China Telecom, and the plan is to procure at least 80% of the core technologies, including AI chips, from domestic suppliers such as Huawei.

China's plan is part of a 'six networks' initiative that includes AI infrastructure, power grids, water, communications, urban underground pipelines, and logistics. Funding is expected to come from long-term government bonds, national funds for strategic industries, bank loans, and private capital, and the overall scale of the plan could be even larger if integration with the power grid is included.

According to Silicon Republic , a news media outlet specializing in semiconductors, China's core AI industry has more than 6,200 companies and is estimated to be worth approximately $174 billion (approximately 27.9 trillion yen) by 2025. IDC estimates China's AI market to be worth approximately $63 billion (approximately 10.1 trillion yen) by the end of 2025 and predicts it will exceed $200 billion (approximately 32 trillion yen) by 2029.

Taiwan and the United States are trying to restrict the influx of advanced AI chips into China, while China is trying to reduce its dependence by developing its own domestically produced AI chips and data center network. If Taiwan were to impose AI chip restrictions on all of its Chinese customers, the disruption of the AI semiconductor supply chain would deepen, potentially leading to a clearer division of the global AI infrastructure between the US and China camps.