Taiwan is reportedly launching an investigation into allegations that local companies may have been assisting Huawei in establishing chip factories in China, potentially violating U.S. sanctions. Concurrently, the European Union (EU) is exploring the implementation of further export controls on technology, especially concerning authoritarian regimes, with a potential impact on China.
The Taiwanese Ministry of Economic Affairs has announced its intention to probe claims suggesting that businesses based in Taiwan might have played a role in assisting Huawei, the Chinese technology giant, in building chip manufacturing infrastructure within China. These allegations have been reported by Bloomberg.
Previous reports by Bloomberg had named four companies allegedly involved in these activities. These companies included a distributor specializing in semiconductor and optoelectronic components and equipment, a cleanroom company, a chemical supplier, and an engineering consultancy. All of these companies have firmly denied the accusations.
However, a report by Nikkei Asia has raised questions about whether some of these companies might have violated U.S. sanctions. For instance, the distributor mentioned in Bloomberg’s report was found to have been primarily engaged in environmental protection, with no documented business transactions related to semiconductor materials or equipment. The engineering consultancy noted that its subsidiary had been involved in renovating a semiconductor plant linked to Huawei but insisted on complying with all applicable laws and regulations.
Reports emerged several months ago indicating that Huawei was actively working to establish a covert network of semiconductor facilities across China. The objective was to ensure the company’s chip supply amid stringent U.S. sanctions. According to the Semiconductor Industry Association (SIA), a trade body representing U.S. chipmakers, Huawei had acquired at least two existing factories and was constructing a minimum of three others. To maintain secrecy, Huawei was allegedly operating under the names of other companies, effectively creating a “shadow manufacturing network.”
These reports gained credibility when Huawei unveiled a 5G smartphone featuring homemade chips last month, an accomplishment previously believed to be beyond the company’s capabilities. This development potentially contributed to rumors that the U.S. is planning to tighten its export restrictions on semiconductor technologies to China.
The EU is also contemplating the introduction of EU-wide export controls on critical technologies. While not exclusively targeted at China, these controls aim to mitigate the risks associated with the misuse of such technologies in violation of human rights or when there is a potential overlap between civilian and military applications in certain countries.
The European Commission has identified four technology areas as highly sensitive, encompassing advanced semiconductors, biotechnologies, artificial intelligence, and quantum technology. Many of these areas align with existing U.S. bans on technology exports to authoritarian regimes.
Initially, the European Commission is recommending that EU member states, in collaboration with the Commission, perform collective risk assessments for these four technology domains by the end of the year. European Commission vice president Věra Jourová emphasized the importance of a unified EU stance based on a shared risk assessment to maintain Europe as a global partner while preserving its technological edge and addressing dependencies.
Thierry Breton, Commissioner for Internal Markets, described this move as a crucial step in enhancing the EU’s resilience. He emphasized the need for continuous monitoring of critical technologies, assessing risk exposure, and taking measures to safeguard strategic interests and security when necessary.
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