Taiwan's chip firms to adhere to new US rules blacklisting Chinese entities

Taiwan'sEconomy Minister Wang Mei-hua said on Wednesday the country'schip companies will adhere to USrules 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 USCommerce Department said the seven Chinese entities were "involved with building supercomputers used by China's military actors, its destabilising military modernisation efforts, and/or weapons of mass destruction programs."

Companies or others listed on the USEntity List are required to apply for licenses from the Commerce Department that face tough scrutiny when they seek permission to receive items from USsuppliers. Tech-powerhouse Taiwan's firms are major suppliers of semiconductors globally.

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"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 USrules," she told reporters.

The USmove 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 USlist.

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

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

Its shares tumbled 9.9 per centon Wednesday, bringing losses to more than a third of their 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 were down 0.5 per centon Wednesday, outperforming a 1.1 per centfall in the broader Taiwanese stock market.