Taiwan plans to impose prison terms of up to five years on people who export AI servers to China without authorization, broadening its Foreign Trade Act to cover violations that were previously handled under other statutes. The measure is among the toughest the Taiwanese government has adopted on exports to China and follows months of consideration. It also aligns Taipei more closely with U.S. controls on advanced AI hardware.
Taiwan Minister of Economic Affairs Kung Ming-hsin said some of Taiwan's measures on controlled items will correspond to American ones because the island has made commitments under the Agreement on Reciprocal Trade. The two sides signed the trade deal earlier this year. Under it, the U.S. cut tariffs on Taiwanese goods to 15 percent in exchange for direct investments in the U.S. tech industry, among other terms.
The policy targets a smuggling pipeline that U.S. authorities have been trying to shut down for some time. The largest case U.S. prosecutors have brought so far involves three Super Micro employees, including co-founder Yih-Shyan "Wally" Liaw, accused of smuggling $2.5 billion worth of AI servers. Months after that case surfaced, Taiwanese authorities raided Super Micro's Taipei offices as part of a probe into Nvidia B300 smuggling, which led to nine people being indicted.
Because Taiwan did not previously treat AI chip exports to China as a crime, violators had to be charged under other laws. Singapore took a similar approach when it arrested suspected smugglers of Nvidia AI GPUs, charging them with fraud and money laundering because it lacks a law barring exports of advanced AI chips to China.
The expansion of the Foreign Trade Act is likely to be welcomed in Washington, which has been pressing other countries to tighten controls on the flow of advanced AI chips into China. It also risks drawing a response from Beijing, which condemned Taipei after Taiwan applied export restrictions on Huawei and SMIC last year. For U.S. technology companies and their Taiwanese manufacturing partners, the change adds a criminal penalty layer to compliance work that until now carried no dedicated export-crime charge on the island.
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