For years, Taiwan has viewed its dominance in supplying countries with cutting-edge chips as a shield from Chinese aggression. Now, officials are testing out semiconductors as a diplomatic sword.
On Tuesday, Taipei for the first time unilaterally imposed semiconductor export controls on a country, limiting shipments to South Africa for actions that “undermined our national and public security.”
Yesterday, the Ministry of Economic Affairs said it had decided to pause the controls as South Africa agreed to re-enter talks about relocating Taiwan’s representative office from Pretoria to Johannesburg.
Photo: REUTERS
Taipei’s chip curbs reflect its strategy to increasingly use economic and trade policy for diplomatic goals, a Taiwanese official familiar with the matter said.
Similar measures could be imposed on other unfriendly nations, they added.
“By utilizing Taiwan’s position in the global chip supply chain, this looks like Taipei’s attempt at building an autonomous deterrent on the world stage,” said Sung Wen-ti (宋文笛), non-resident fellow at the Atlantic Council’s Global China Hub. “Going forward, other governments will be looking at this example and considering not only Taiwan’s carrots, but also its potential sticks.”’
While Taiwan likely would not wield such restrictions against major European economies or the US, President William Lai’s (賴清德) decision to target smaller partners could amplify broader concerns over its dominance of chips.
Export controls on semiconductors and chipmaking equipment have become a central battleground between the US and China in recent years, with Washington pressuring allies including the Netherlands, South Korea and Japan to adopt policies despite their potential to hurt domestic companies.
That has ramped up the need for countries to maintain a degree of supply chain self-reliance, even from friendly partners.
China is perhaps most exposed to Taiwan’s controls, as Lai becomes more assertive in countering Beijing’s aggression.
Earlier this year, Taiwan blacklisted Chinese tech giants Huawei Technologies Co and Semiconductor Manufacturing International Corp from accessing crucial chip plant construction technology, signaling a willingness to ramp up its use of trade tools.
Chinese Ministry of Foreign Affairs spokesman Guo Jiakun (郭嘉昆) on Wednesday told a regular news briefing in Beijing that Taiwan had “deliberately destabilized global” supply chains with its action against South Africa.
The South Africa policy is still in its “notification period,” said Cathy Fang (方怡然), an analyst at the Research Institute for Democracy, Society and Emerging Technology in Taipei, suggesting the government was leaving room for negotiation.
“The global push for domestic semiconductor manufacturing has already been underway for some time and is driven by broader strategic concerns,” she said, downplaying the potential impact of skirmishes like the one with South Africa.
South Africa relies significantly on foreign automaking plants for its economic growth.
While Taiwan’s actions could affect those operations, the official said such companies generally source semiconductors through global automakers rather than directly from manufacturers in Taiwan — a signal the curbs were not intended to apply maximum pain.
Underscoring the symbolic nature of the action, official data from Taiwan show that last year it exported to South Africa about US$4 million of the goods included on the export suspension list.
William Yang, a senior analyst for North East Asia at the International Crisis Group, described Taiwan’s response to South Africa’s demands as simply “self defense,” which could inspire solidarity in some parts.
“The move might even push like-minded democracies to deepen supply chain cooperation with Taiwan,” he added.
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