US-China tech tensions rise as Taiwan blacklists Huawei

Taiwan has placed Huawei Technologies and its primary chip supplier, Semiconductor Manufacturing International Corp. (SMIC), on a trade blacklist.

This move prohibits local firms from engaging with these companies without obtaining prior licenses, aligning Taiwan with US efforts to limit China’s access to advanced technology.

US officials have urged Taiwan to strengthen enforcement of restrictions on chip-related transactions with China.

The sanctions are part of a broader strategy to restrict the flow of critical semiconductor technology to China.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Taiwan’s policy shift continues decades of economic-security oscillation

Taiwan’s blacklisting of Huawei and SMIC follows a historical pattern of balancing economic liberalization and restriction in its relationship with China.

As early as 1996, Taiwan implemented a “No Haste” policy restricting investment in China, reflecting security concerns despite economic opportunities, which was later replaced by an “Active Opening” policy in 2001 under different leadership1.

This economic-security dilemma has been a defining feature of Taiwan’s approach, with investments in China reaching $144 billion by 2014, while simultaneously considering China an existential threat1.

The deep economic integration established over decades, with 85% of Taiwan’s information technology exports being produced in China, makes the current restrictions particularly significant and potentially disruptive to established supply chains1.

President Lai’s blacklisting decision signals a shift back toward prioritizing security concerns over economic integration, continuing this decades-long balancing act between engagement and restriction.

2️⃣ Regional tech powers face similar challenges in U.S.-China chip rivalry

Taiwan’s sanctions on Chinese tech firms highlight how East Asian tech powers are navigating increasingly difficult positions in the U.S.-China technological competition.

South Korea faces similar pressures, with over 60% of its chip exports going to China, creating significant economic vulnerability if it fully complies with U.S. restrictions2.

Japan is also working to reduce dependence on China for critical tech materials, investing in domestic production facilities and seeking partnerships with countries like Australia and Canada to diversify supply chains3.