Taiwan is considering criminalizing the smuggling of AI chip servers to China for the first time, according to Bloomberg.
- Taiwan is weighing tougher controls on AI chip exports as part of ongoing trade talks with the U.S.
- Under current Taiwanese law, shipping AI chips to China without authorization is not a criminal offense.
- The proposed rules would strengthen authorities’ ability to act against the illegal rerouting of advanced AI hardware, including Nvidia-powered servers to China.
Shares of Nvidia (NVDA) and Taiwan Semiconductor Manufacturing Co (TSM) were in the spotlight premarket on Tuesday after the report that Taiwan is considering much stricter export controls on AI chip sales to China to further align with U.S. measures.
According to the report, the proposed rules would strengthen authorities’ ability to act against the illegal rerouting of advanced AI hardware, including Nvidia-powered servers to China, where such sales have required the U.S. government approval since 2022 to prevent Beijing from gaining a military edge through access to these processors.
At the time of writing, NVDA and TSM stocks were flat on Tuesday.
Taiwan Eyes Criminal Charges For AI Chip Smuggling In Policy Overhaul
Under current Taiwanese law, shipping AI chips to China without authorization is not a criminal offense. Even though Taiwanese authorities warn companies against such acts, they can only take action within the existing framework of local laws.
As part of ongoing trade negotiations with Washington, Taipei is now considering controls that would go well beyond its current blacklist approach, restricting AI chip sales to all Chinese customers rather than just sanctioned companies like Huawei.
The shift would also allow Taiwan to treat AI chip smuggling to China as a criminal offense for the first time, according to people who asked not to be identified discussing a sensitive matter, Bloomberg reported.
Taiwan And U.S. Working Out A Deal
The proposal is still taking shape. Taiwan has broadly agreed to mirror the U.S. framework, likely restricting AI chips above a certain processing power threshold, as Washington already does.
However, it has yet to decide how closely it will follow American policy in practice. Details still need to be worked out before senior officials on both sides can formally review and approve any agreement, according to Bloomberg.
When Taiwan announced last month’s arrests of suspected chip smugglers on document falsification charges, the official statement left out key details, including that Japan was allegedly used as a transit point, and that investigators suspected the defendants had already successfully moved at least one shipment of servers through that route before the hardware reached Hong Kong.
What Retail Thinks Of NVDA And TSM
On Stocktwits, retail sentiment surrounding NVDA stock has declined to ’bearish’ from ‘neutral’ while message volumes remained ‘low’ in the past 24 hours.
While for TSM stock, retail sentiment has remained ’bearish,’ message volumes increased to ‘high’ from ‘normal’ in the past 24 hours.
TSM stock has gained over 33% while NVDA stock has climbed over 10% so far this year.
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