Taiwan is preparing export controls that would cover shipments of artificial intelligence chips to every customer in mainland China, extending a regime that today restricts only named entities such as Huawei Technologies and Semiconductor Manufacturing International Corp. (SMIC), Bloomberg reported on June 9.

Officials in Taipei are discussing the proposed rules with their U.S. counterparts during ongoing trade negotiations. The draft framework would prohibit AI chips meeting defined performance thresholds from reaching any Chinese buyer and would create a new criminal offense for diverting restricted hardware abroad, according to people familiar with the matter.

What would change under the proposed rules?

Taiwan's current export controls are entity-based. Shipments to Huawei, SMIC and a short list of other designated companies require approval, but transactions with most Chinese customers proceed without scrutiny. The new measures would replace that company-by-company approach with a chip-level performance test applied uniformly across all Chinese end users.

That shift directly targets the rerouting channel that has emerged since the U.S. Department of Commerce first restricted high-performance NVIDIA accelerators in October 2022. Taiwanese contract manufacturers integrate NVIDIA's data-center GPUs into AI server systems used by hyperscalers worldwide; cutting off all Chinese customers above a defined performance floor would close the most common leakage path, which today funnels restricted silicon through Hong Kong and other third-party jurisdictions.

Why create a new criminal offense?

Sending AI chips to China without authorization is not currently a crime under Taiwanese statute. Prosecutors handling suspected diversion cases have had to charge defendants under forgery and customs-misdeclaration provisions, even when the underlying conduct was export-control evasion.

In May, Taiwanese authorities arrested individuals believed to have shipped NVIDIA-equipped servers from Taiwan to Japan and onward to Hong Kong. The charges filed against them were limited to forgery. A dedicated AI-chip-export offense would let prosecutors pursue the underlying diversion directly.

What has Taipei said publicly?

A Taiwanese Ministry of Economic Affairs spokesperson told Bloomberg: "We will continue to strengthen oversight of strategic advanced technology products and enhance alignment with international export controls."

The ministry confirmed that Taipei and Washington remain in continuing discussions about including advanced semiconductors in coordinated regulatory measures. Officials have not disclosed the performance thresholds, the model coverage or the implementation timeline any final rule would carry.

How exposed is the Taiwanese supply chain?

Taiwan's role in NVIDIA AI chip production and server assembly gives the proposed rules outsize commercial weight. Taiwanese original design manufacturers build the majority of AI server platforms carrying NVIDIA accelerators; any blanket restriction on Chinese end-user sales would reshape their order books, particularly for the downgraded products NVIDIA designed specifically to comply with Washington's 2022 thresholds.

President Lai Ching-te's administration is expected to settle the scope before year-end. The final rules would define performance cutoffs, list covered NVIDIA part numbers and set penalties for diversion — details that will determine how much compliant Chinese demand survives the new regime.

China's Ministry of Commerce has not publicly responded to the reported proposal. Beijing has previously described unilateral chip export controls as violations of free-trade norms and warned of countermeasures targeting U.S. and allied suppliers operating in China. That stance leaves open the prospect of retaliation against Taiwanese or American semiconductor firms once the new rules take effect.