Taiwan says its chip firms will adhere to new U.S. rules blacklisting China supercomputing entities

[April 14, 2021]  TAIPEI (Reuters) - Taiwan said on Wednesday its chip companies will adhere to U.S. rules after Washington added seven Chinese supercomputing entities last week to an economic blacklist and after a Taipei-based chipmaker halted orders from one of the entities named.

The U.S. Commerce Department said the seven Chinese entities were "involved with building supercomputers used by China's military actors, its destabilizing military modernisation efforts, and/or weapons of mass destruction programs."

Companies or others listed on the U.S. Entity List are required to apply for licenses from the Commerce Department that face tough scrutiny when they seek permission to receive items from U.S. suppliers.

Tech-powerhouse Taiwan's firms are major suppliers of semiconductors globally, and Economy Minister Wang Mei-hua said they would follow Taiwanese and U.S. rules.

"Our companies, whether producers or exporters, must accord with our country's rules. Of course the United States has new rules, and our companies will pay attention and accord with the key criteria of the U.S. rules," she told reporters.

The U.S. move came amid its rising tensions with China over Taiwan. China has never renounced the use of force to bring the democratically ruled island under its control.

It also came amid a global shortage of semiconductors that has thrust Taiwan centre-stage into the technology supply-chain.

On Tuesday, Taiwan's Alchip Technologies Ltd said it had stopped production for all products related to Tianjin Phytium Information Technology, which is on the new U.S. list.

Alchip, which said 39% of its revenue last year came from Phytium, added that it was collecting "detailed documents for our U.S. counsel to determine if the products are subject to EAR (Export Administration Regulations)".

A U.S. Bureau of Industry and Security "permit will be obtained for Phytium's products if necessary", it added.

Its share price tumbled 9.9% on Wednesday, bringing losses to more than a third of the shares' value since the Commerce Department's announcement last week.

Separately, Hong Kong's South China Morning Post reported that Taiwan Semiconductor Manufacturing Company Co Ltd (TSMC), the world's largest contract chipmaker, has suspended new orders from Phytium.

TSMC said it could not confirm the report, and declined further comment.

TSMC shares closed up 1.16% on Wednesday, outperforming a 0.24% rise in the broader Taiwanese stock market.

(Reporting by Ben Blanchard; Editing by Muralikumar Anantharaman and Christopher Cushing)

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