Huawei and Semiconductor Manufacturing International Corp. (SMIC), two key players in China's push for semiconductor and AI self-sufficiency, have been added to Taiwan's strategic high-tech commodities entity list. The move could significantly restrict their access to Taiwan-origin technologies, materials, and equipment essential for semiconductor manufacturing.

The updated list, quietly published by Taiwan's Bureau of Foreign Trade over the weekend, includes Huawei, SMIC, and several of their subsidiaries—including Huawei branches in Japan, Germany, and Russia. Under Taiwan's current export control regulations, local suppliers must now obtain government approval before shipping any strategic high-tech goods to these listed entities.

Industry observers say the new restrictions may further cut off Huawei and SMIC from key Taiwanese chipmaking tools and factory inputs, adding pressure to Chinese efforts to develop advanced AI and semiconductor capabilities. Although Taiwan has long imposed controls on exports of critical tools like lithography equipment to China, this marks the first time it has formally named major Chinese tech firms in its entity list.

The announcement follows a report last year alleging that Huawei used intermediaries to procure two million advanced chiplets from TSMC, in violation of U.S. sanctions. In 2020, TSMC officially ceased shipments to Huawei after U.S. export controls came into effect.

With Taiwan home to vital global suppliers—including TSMC, UMC, ASE, SPIL, and Nanya—the new rules are expected to have wide-reaching impact, especially as the industry continues to decouple along geopolitical lines. Taiwanese firms across the semiconductor supply chain will now be restricted from fulfilling orders for Huawei and SMIC unless granted a special export license.

Neither Huawei, SMIC, nor Taiwan's Ministry of Economic Affairs has publicly commented on the updated entity list.

Analysts note that while Huawei and SMIC achieved notable breakthroughs in 2023 with the release of 7nm chips, escalating restrictions from both the U.S. and its allies may further delay China's progress in closing the AI hardware gap.