Taiwan has intensified its technology export controls by blacklisting two of China’s foremost semiconductor companies, Huawei Technologies and Semiconductor Manufacturing International Corp (SMIC), amid escalating tensions in the global tech sector. 

The updated Strategic High-Tech Commodities Entity List, released by Taiwan’s Ministry of Economic Affairs, now includes both firms along with several of their subsidiaries, requiring Taiwanese companies to obtain government approval before exporting any products to them. Neither Huawei nor SMIC issued an immediate response to their inclusion.

This move effectively cuts off Huawei and SMIC from accessing advanced semiconductor technologies produced in Taiwan, undermining their efforts to compete with major US chipmakers such as Nvidia. The decision comes as part of a broader strategy, aligned with US-led restrictions, to limit China’s advances in the chipmaking sector.

The complex geopolitical backdrop behind Taiwan

China asserts sovereignty over Taiwan and has threatened military action to achieve unification, while the US and most other countries do not recognize Taiwan as an independent state but oppose any forcible annexation and support Taiwan’s defensive capabilities.

New restrictions will further seal loopholes and reduce collaboration between Chinese firms and Taiwanese tech companies, compounding existing US export bans on mainland tech leaders and exacerbating the production challenges both Huawei and SMIC were already facing.

Both companies have been central to China’s push for self-sufficiency in semiconductor manufacturing, especially after the successful launch of a domestically developed 7-nanometer chip in Huawei’s Mate 60 smartphone line in 2023. This development prompted scrutiny in Washington about the effectiveness of existing sanctions. 

The US has also pressured Taiwan and its companies, including TSMC, the world’s largest contract chipmaker, to restrict access to advanced chipmaking technologies for mainland clients.

Semiconductor chips’ role in Bitcoin mining

Semiconductor chips are the backbone of crypto mining, particularly for Bitcoin. Mining relies heavily on specialized chips known as application-specific integrated circuits (ASICs), which are engineered to execute the complex cryptographic calculations required for mining with maximum efficiency. 

Bitcoin’s SHA-256 algorithm, for example, is processed most effectively by ASIC chips, which can perform trillions of calculations per second, far outpacing general-purpose CPUs or GPUs. This specialization allows miners to solve cryptographic puzzles faster and more efficiently, earning rewards for solving blocks and securing the blockchain. 

High-performance chips like these are crucial for maintaining profitability and competitiveness in the mining industry, especially as mining difficulty increases and energy costs rise.

Taiwan’s latest export controls further isolate China’s leading chipmakers from global technology supply chains, reinforcing the strategic importance of semiconductor production in both geopolitics and emerging industries like crypto mining and AI.