Taiwan to Join US China Chip Curbs, Seek Criminal Penalties for AI Chip Smuggling

Taiwan is moving to tighten export controls on artificial intelligence chips and servers in line with US restrictions on advanced semiconductor sales to China, and is seeking to criminalize illegal shipments to the mainland.

Bloomberg reported on October 16 that Taiwan Economy Minister Kuo Jyh-huei said in an interview that the government plans to add AI servers and advanced semiconductors to its export control list. Once the measures take effect, exporting restricted AI chip equipment to China without a license would be subject to criminal penalties under Taiwan's Foreign Trade Act.

In the interview, conducted on October 12, Kuo said some future export control measures would be aligned with US rules because Taiwan had made substantial commitments in a mutual trade agreement signed with the US this year. He did not provide a timeline for implementation.

The move comes as Washington tightens export restrictions aimed at blocking advanced AI semiconductors from reaching China. The US has restricted exports of high-performance AI chips made by Nvidia and Advanced Micro Devices Inc. to China, but Chinese companies are known to have obtained such products through third countries and other channels. US authorities believe Nvidia chips worth billions of dollars have entered China illegally in recent years.

Taiwan currently lacks a provision allowing authorities to treat the unauthorized export of AI chips to China as a criminal offense in itself. While officials have warned about potential violations of US export controls, prosecutors have had to rely on other domestic laws when pursuing smuggling cases.

If the new rules are adopted, Taiwan would gain a direct legal basis to criminally punish the smuggling of advanced AI chips into China. That would make the measure one of the key export-control steps under President Lai Ching-te's government to prevent technology leaks and strengthen national security.

Taiwan has previously said it would respond to US concerns over export controls. The tighter rules also reflect a broader push to deepen economic and security cooperation with Washington while limiting the outflow of advanced technology to China.

Separately, Taiwan is also pursuing investment to build an AI semiconductor supply chain in the US. Kuo told Bloomberg this week that the government plans to raise billions of dollars to develop industrial parks in the US. The goal is to establish a local supply chain that AI hardware companies, including Nvidia, can use.