By Joyce Huang | 2026-06-24

Taiwan is mulling measures to tighten export controls on artificial intelligence (AI) chip sales to China, according to Minister of Economic Affairs Kung Ming-hsin.

Kung told a legislative session on June 17 that his ministry has begun drafting legal amendments to impose stricter AI chip bans on China, addressing concerns over illegal transfers of Nvidia AI chips to China by way of Taiwan.

His ministry is in consultation with multiple agencies including national security bodies and finance, trade and customs regulators before changes can be finalized and implemented "as quickly as possible," he said.

The proposed changes could allow Taiwan to prosecute AI chip smuggling to China as a criminal offense for the first time.

Nvidia server case

The minister made the comment after Democratic Progressive Party (DPP) legislator Chung Chia-pin expressed concerns over reports that U.S. tech giant Super Micro Computer Inc. allegedly was involved in the illicit transfer of Nvidia AI chips to China.

The DPP holds the presidency but has only a minority in parliament.

On March 19, US federal prosecutors charged three individuals, tied to Super Micro, with illegally diverting $2.5 billion worth of Nvidia AI servers to China, in violation of US laws barring China-bound chip exports without a license.

The trio used a Southeast Asia-based intermediary to conceal that the servers were destined for China, according to the U.S. indictment cited by CNN.

They provided forged documents to further the deception while repackaging the servers into unmarked boxes to conceal the content before it reached customers in China, the report added.

The suspects repackaged the servers into unmarked boxes and shipped them to customers in China, prosecutors said.

Authorities identified the suspects as Wally Yih-Shyan Liaw, Steven Ruei-Tsang Chang and Willy Ting-Wei Sun.

They released Liaw, who co-founded Super Micro and served on its board of directors, on a $5 million bond, while Sun, an outside contractor described by prosecutors as a "fixer" in the scheme, was negotiating a bail package with prosecutors after an early April court hearing.

Chang, general manager of Super Micro's Taiwan branch, remains a fugitive.

Legal loopholes

The DPP's Chung called it "an irony" that U.S. prosecutors are seeking 20-year jail terms for the suspected smugglers while Taiwan could hold them accountable on charges only of "forgery." Under such charges, a conviction often leads only to a fine.

Chung urged the Taiwanese government to "immediately impose full-scale chip export bans on China."

"If Taiwan, as the silicon shield of the global semiconductor [alliance], keeps a more lenient regulatory regime [of chip export controls] toward hostile countries than our U.S. counterpart… we are not only weakening our own national security defense, but also exhausting the international society's trust in Taiwan," Chung posted on Facebook June 17.

Taiwan does not consider unauthorized AI chip exports to China to be a crime, although authorities there do put Chinese companies including Huawei and Semiconductor Manufacturing International Corp. (SMIC) on an export blacklist.

Therefore, when Taiwanese authorities detained three Taiwanese suspects in late May for having allegedly smuggled Super Micro's AI servers containing advanced Nvidia chips possibly to China, the island's prosecutors had only one option: a charge of forgery.

Taiwan is considering restrictions on AI chip sales to "all customers in China" and making AI chip smuggling a criminal offense, Bloomberg reported June 9, citing sources familiar with the matter.

The report cited the Economics Affairs Ministry as confirming that it aims to beef up oversight of "strategic high-tech goods" for better alignment with international export controls while safeguarding Taiwan's national security.

National security concerns

Taiwan's proposed controls, if enacted, would signal its determination to align with Washington's chip restrictions and close loopholes exposed by the Super Micro case, said Lin Tsungnan, a professor of electrical engineering at National Taiwan University in Taipei.

Tighter controls would limit Beijing's access to advanced processors that could support military applications, he added.

"Banning exports of AI chips to China is absolutely the right move [for Taiwan], or you will be [handing China a military edge by] selling advanced [AI-powered] weaponry to our enemy, which will gradually weaken our own national security," Lin told Focus.

The island's development of drones or any other unmanned technology, to be deployed in any future warfare across the Taiwan Strait, will require Taiwan to keep the upper hand in adopting next-generation AI technology, he said.