Taiwan Plans to Restrict AI Exports to China With Prison Terms of Up to 5 Years
Key Facts
Taiwan plans to expand its export control list to include AI servers and advanced semiconductors, Economic Affairs Minister Kung Ming-hsin told Bloomberg. The scope outlined by the minister covers servers as well as chips, broadening the categories of equipment included in the plan. Shipping restricted equipment to China will become a criminal offense under the Foreign Trade Act once the measures take effect, the minister said. The plan is part of efforts to align Taiwan's controls with U.S. restrictions and combat the diversion of advanced equipment. An earlier Bloomberg report said the aim was to give authorities "more legal tools to deal with the diversion of advanced equipment."
The sales concerned are already banned under U.S. rules, according to Bloomberg's earlier report on Taiwan's consideration of tighter controls. The ban exempts companies that obtain Washington's approval to complete the sales. The United States began imposing those restrictions in 2022, before Taiwan's plan to expand its list of restricted goods. On its license review policy, the U.S. Commerce Department's Bureau of Industry and Security said applications to export Nvidia's H200 and AMD's MI325X chips, and their equivalents, would be reviewed on a case-by-case basis. The bureau tied that review to compliance with security requirements, keeping approval of applications conditional on meeting those requirements.
The move comes within a trade relationship that includes commitments to economic and security cooperation between Washington and Taipei. According to the Office of the U.S. Trade Representative, the reciprocal trade agreement between the two sides provides for stronger economic cooperation and cooperation on national security. The office identified greater supply chain resilience as an objective of that commitment under the agreement. Bilateral trade in goods and services exceeded $185 billion in 2024, according to the same office. That total covers exchanges of goods and services between the two sides, within the relationship framed by the reciprocal trade agreement and its associated cooperation commitments.
Taiwan previously expanded its control list in June 2025 by adding 601 entities, according to a Reuters report published on 15 June that year. The additions included Huawei and Semiconductor Manufacturing International Corp. The list also included entities from Russia, Pakistan, Iran, Myanmar and China, extending the update beyond the Chinese companies named. In the 30 June 2025 session, Investing reported that Chinese chip stocks rose amid a dispute over export restrictions. The report attributed those gains to bets on additional government support for the sector following restrictions imposed on mainland China.
In a U.S. case involving the diversion of servers to China, the Justice Department outlined charges concerning large purchases through an intermediary company. According to the indictment, the company purchased servers worth approximately $2.5 billion during 2024 and 2025. The department said the purchases were made from a U.S. manufacturer, as part of the case involving the illegal diversion of equipment. The indictment concerned individuals linked to Supermicro, which issued a statement on its legal status. In the statement filed with the U.S. Securities and Exchange Commission, the company said that "Supermicro is not a defendant in the indictment."
Under Taiwan's regulations on strategic high-tech commodities, exporters must first apply for an export license. The Foreign Trade Act covers cases in which such goods are sent to restricted areas without authorization and allows prison terms of up to 5 years. It also permits fines of up to 3,000,000 Taiwan dollars for violations covered by the legal provision. The fine may be imposed instead of imprisonment or alongside it, according to the text published by Taiwan's Ministry of Economic Affairs. Once the planned measures take effect, shipping restricted AI equipment to China will be subject to criminal prosecution under this law, according to the minister.