Taiwan Sides with U.S. in Tech War, Adds Huawei to Export Control List

The International Trade Administration of Taiwan added Chinese chipmakers Huawei Technologies and Semiconductor Manufacturing International Corp (SMIC) to its export control list on Sunday, aiming to block them from accessing Taiwan’s advanced chips. The move could be a significant setback for Huawei, which is striving to dominate China’s semiconductor market with its advanced chips.

Huawei is seeking to capitalize on the ongoing U.S.-China trade tensions by filling the gap created by the absence of Nvidia’s (NVDA) advanced artificial intelligence (AI) chips in China.

Taiwan’s Strategic Controls Curb China’s AI Ambitions

Inclusion on the “Strategic High-Tech Commodities Entity List” means that Taiwanese companies must obtain special government permits before exporting their advanced chip technologies to the listed entities. This will limit Huawei and SMIC’s access to Taiwan’s plant construction technologies, materials, and equipment, effectively setting back China’s progress in the AI race. The list includes Huawei, SMIC, and all of their subsidiaries, including Huawei’s units in Japan, Russia, and Germany.

Taiwan is following the U.S.’ lead in measures to stop China from using advanced technologies to strengthen its military operations. Both countries have cited national security concerns and arms proliferation issues as reasons for including Chinese companies on their trade blacklists. Recently, the Trump administration also tightened controls on the export of Nvidia’s export-compliant H20 chips to China. The U.S. had already imposed sanctions in 2020, restricting Taiwan Semiconductor Manufacturing (TSM) from exporting its chips and technologies to Chinese entities. Notably, TSM is one of world’s largest contract manufacturers and a major supplier to Nvidia.

Taiwan’s latest export controls on Huawei and SMIC could likely benefit Nvidia by increasing barriers for its Chinese rivals in the AI chip market. Nvidia is already dealing with the aftermath of the restrictions on its H20 chips to China. Last week, Nvidia’s CEO Jensen Huang said that the company will stop including the China market in its sales and profit forecasts going forward.

Is NVDA Stock a Buy?

Wall Street remains highly optimistic about Nvidia’s long-term stock trajectory. On TipRanks, NVDA stock has a Strong Buy consensus rating based on 35 Buys, four Holds, and one Sell rating. Also, the average Nvidia price target of $172.36 implies 21.4% upside potential from current levels. Year-to-date, NVDA stock has gained 5.7%.

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