In a move that formalizes its alignment with Washington, Taiwan has officially added Chinese tech giants Huawei and SMIC to its trade blacklist. This decision escalates the global technology cold war. The action places the firms on Taiwan’s “Strategic High-Tech Commodities Entity List”, a designation that requires domestic companies to secure a government license before shipping any products to them.
While major Taiwanese firms like TSMC already comply with U.S. restrictions, this new domestic regulation significantly raises the stakes. It aims to reinforce existing policies and increase the punishment for any potential breaches, according to analysts. The update was part of a broader action that added 601 foreign entities to the list, citing concerns over national security and weapons proliferation in an official statement.
This formal blacklisting is the culmination of long-simmering tensions over the integrity of the semiconductor supply chain. The issue of indirect shipments gained prominence in late 2024 after TSMC itself flagged a suspicious order resembling one of Huawei’s advanced AI chips. That incident triggered a U.S. Commerce Department investigation and demonstrated the persistent challenge of policing technology exports.
A New Front in the U.S.-China Tech War
Taiwan’s decision draws a sharp new line in the sand of the U.S.-China tech rivalry. The island, which produces the vast majority of the world’s most advanced semiconductors, is now codifying its role within the Western technology blockade against Beijing. This alignment shows the broader, painful shift away from decades of integrated global trade, a sentiment captured in recent remarks by TSMC founder Morris Chang, who noted that the era of globalization is nearing its end.
The new export controls are expected to directly hamper China’s technological progress by restricting access to essential Taiwanese suppliers of lithography machines, advanced materials, and specialized manufacturing equipment. This move tightens the economic and technological containment strategy championed by the U.S., which seeks to slow China’s development in critical dual-use fields like artificial intelligence and quantum computing.
Huawei’s Sanction-Proofing Playbook
Faced with this increasingly unified blockade, Huawei has been executing a successful strategy for technological self-sufficiency. The company is aggressively building out its own domestic supply chain, with satellite imagery revealing a massive expansion of advanced chip production facilities in Shenzhen. This effort is geared toward mass-producing its own Ascend series of AI processors as viable alternatives to restricted hardware from companies like Nvidia.
While acknowledging the technological gap, Huawei is betting on innovation to close it. In recent comments from founder Ren Zhengfei, he stated that while the company’s chipsets are a generation behind U.S. technology, Huawei aims to compensate through software advances. He defiantly added, “Our country will be more and more open, and this will promote our progress. China will break all restrictions to achieve great rejuvenation.”
This ambition is already taking physical form in products like the AI CloudMatrix 384, a large-scale computing cluster that leverages architectural scale to compete with top-tier Nvidia systems, demonstrating a clear playbook for remaining competitive despite sanctions.
Cracks in the Digital Curtain
However, enforcing this digital blockade presents immense challenges. The complexity of the global supply chain makes it difficult to track every component to its final destination. TSMC has previously stated that its position as a foundry inherently limits its visibility into how its chips are ultimately used. This opacity has been a key focus for regulators.
The 2024 investigation into a potential TSMC-made chip ending up in a Huawei device via an intermediary highlighted the risk of such supply chain leaks. That probe raised the possibility that TSMC could face a $1 billion fine or more if significant compliance failures were proven. Taiwan’s new blacklisting aims to seal these cracks by placing the legal burden squarely on its domestic suppliers, making it more difficult for intermediaries to operate.
The Great Tech Divergence
As the technological wall around China grows higher, a different story is unfolding elsewhere. The U.S. and its allies are simultaneously fueling an AI infrastructure boom in friendly nations, creating a bifurcated global market. In a striking contrast, Saudi Arabia’s new national AI entity, Humain, is undertaking a multi-billion-dollar offensive to become an AI superpower, built almost entirely on American technology.
Humain has already cemented tens of billions of dollars in deals with U.S. tech leaders, including Nvidia, AMD, and Amazon Web Services. The Kingdom has even launched a $10 billion venture capital fund and holding talks with top American firms like OpenAI and Andreessen Horowitz to become equity partners.
Humain’s CEO, Tareq Amin, has been explicit about this strategy, stating the company was “deliberate on the partnerships and the choices that we have picked” because the U.S. ecosystem is “very critical.” This trend extends beyond the Middle East, as the European Union recently unveiled an ‘AI Continent’ action plan to mobilize hundreds of billions of euros for its own AI gigafactories.
This global realignment marks a profound shift. Taiwan’s blacklisting of Huawei and SMIC is not an isolated event but a formal recognition of a world splitting into parallel technological ecosystems. While one is defined by restriction and a drive for self-reliance, the other is characterized by hyper-accelerated, collaborative growth. The long-term consequences of this great divergence—on innovation, competition, and global stability—are only just beginning to unfold.
