Taiwan Plans Criminal Penalties for Unlicensed AI Chip Exports to China

Taiwan plans to make unlicensed exports of advanced AI chips and servers to China a criminal offence, Economy Minister Kung Ming-hsin said in a Bloomberg interview published on 16 October. The measure would add the items to Taiwan’s controlled export list under the Foreign Trade Act. The rules have not taken effect, and no implementation date has been set.

The plan is linked to the Agreement on Reciprocal Trade that Taiwan and the United States signed on 12 February 2026, under which Taiwan agreed to keep an effective export control regime, TechTimes reports. Taiwan currently has no provision that treats unauthorised AI chip exports to China as a crime in itself, Bloomberg reports, so prosecutors have relied on other laws.

What Changes for Server Makers and Chip Exporters

TechTimes reports that advanced AI chips and assembled AI servers are not among the 12 categories on Taiwan’s current Strategic High-Tech Commodities list. That list names semiconductor manufacturing equipment and specialised inspection tools among its items. Bloomberg reported in June that prosecutors could only charge suspected smugglers under other laws, such as document falsification.

Under the planned listing, shipments of those items to China without a licence would be a criminal violation. TechTimes reports that the amendment would move China into the controlled-destination category, making criminal prosecution available.

Current Penalty Baseline
Under Article 27 of Taiwan’s Foreign Trade Act, shipments of controlled items to controlled destinations carry up to five years in prison, according to TechTimes.

How the Penalties Are Set Out Under the Foreign Trade Act

TechTimes reports that Article 27 of the Foreign Trade Act allows up to five years in prison for strategic high-tech goods shipped to controlled destinations. Article 27-2 sets civil fines of NT$60,000 to NT$3 million for non-controlled destinations. Tom’s Hardware, carried on Yahoo, gives the penalty for smuggling as up to five years in prison and/or a fine of around $92,500.

TechTimes converts the NT$60,000 to NT$3 million range to about US$1,875 to US$93,750, at a rate of about NT$32 to US$1.

Legislator Chung Chia-pin, of the Democratic Progressive Party, has proposed a ‘mainland China semiconductor chip clause’ that would formally designate China as a controlled destination. TechTimes reports that Chung described the existing gap as a loophole from the Ma Ying-jeou administration.

How It Relates to US Export Controls and the Trade Deal

Kung said some measures on controlled items will correspond to American ones, according to Tom’s Hardware. Taiwan News reports that the changes are part of commitments under the Agreement on Reciprocal Trade. It also notes that the US has tightened its controls on advanced semiconductor exports since 2022, citing concerns that the technology could strengthen China’s military.

In return, TechTimes reports, Taiwan’s IEEPA tariff fell from 20% to 15%, and it received preferential treatment in the US Section 232 semiconductor investigation. A separate investment memorandum signed in January 2026 covered $250 billion in direct investment and $250 billion in credit guarantees.

In June, Bloomberg reported that Taipei was weighing controls on sales to all Chinese customers, not only companies on its export blacklist, which includes Huawei and SMIC. That report said Taiwan was likely to curb sales above a processing-power threshold, much like the US approach, and that details were not final.

Tom’s Hardware reports that US prosecutors have accused three Super Micro employees, including a co-founder, of smuggling $2.5 billion of AI servers to China. Taiwan News reports that a contractor linked to Super Micro pleaded guilty to diverting Nvidia-powered AI servers to China, and TechTimes says that contractor was one of three defendants named in the same indictment.

Taiwanese authorities later raided Super Micro’s Taipei offices in connection with a Nvidia B300 smuggling probe, which led to nine people being indicted, Tom’s Hardware reports. Taiwan News reports that nine people were indicted in August over an alleged scheme to export AI servers to China, on charges including breach of trust and document forgery; the case involved 130 servers, 74 allegedly shipped to China through other countries.

Singapore, which lacks a specific export law, has charged suspected smugglers with fraud and money laundering instead, Tom’s Hardware reports.

Taiwan currently has no provision that treats unauthorised AI chip exports to China as a crime in itself.

Open Questions Before the Rules Take Effect

TechTimes reports that the Ministry of Economic Affairs has begun drafting the rules. Finalising them requires coordination with national security agencies, the National Science and Technology Council and the Ministry of Finance. Passage by the Legislative Yuan before year-end is uncertain, though TechTimes describes political momentum for the change as considerable.

Sources differ on the minister’s name. Bloomingbit gives Kuo Jyh-huei, while Taiwan News, TechTimes and Tom’s Hardware give Kung Ming-hsin. Bloomingbit also gives 12 October as the interview date.

The final regulatory text has not been published, so the technical scope of controlled AI chips is not yet known. TechTimes reports that a performance threshold resembling the US approach may be used, but this has not been confirmed. Taiwan News reports that Kung did not say when the measures would take effect.

Tom’s Hardware reports that Beijing condemned Taipei after Taiwan restricted exports to Huawei and SMIC last year. TechTimes reports that Beijing has not specifically commented on the 16 October announcement, and that China’s commerce and science ministries published their own export restrictions covering 40 technologies, including AI and chips, the same day.