This article first appeared on GuruFocus.
Taiwan’s government could be preparing to turn its most valuable export into a diplomatic instrument. Foreign Minister Lin Chia-lung said in Taipei that export controls on semiconductors remain under assessment as part of broader foreign policy options. He emphasized that while Taiwan hopes not to use such measures, it must be ready to act if other nations damage its interests. Lin avoided naming specific countries but underscored that Taipei does not intend to weaponize chipsa cautious message aimed at balancing diplomacy with the island’s vital tech industry.
The comments come just months after Taiwan abruptly suspended restrictions it had placed on chip exports to South Africa. That unprecedented move, imposed and then withdrawn within two days, reflected Taipei’s frustration over Pretoria’s moves seen as undermining its national and public security. The episode highlighted Taiwan’s growing willingness to use trade as a tool of statecraft but also its discomfort with the potential fallout for corporate heavyweights like Taiwan Semiconductor Manufacturing Co. (NYSE:TSM), whose chips power the global AI supply chain.
China, one of the most exposed markets to any future tightening, condemned Taiwan’s earlier curbs. The dispute traces back decades, but tensions reignited last year when South Africa reportedly pressed Taiwan to relocate its liaison office from Pretoria to Johannesburgshortly after hosting the BRICS summit attended by Chinese leader Xi Jinping. With Pretoria now set to host this month’s G20 meeting, where Xi is expected again, Taiwan’s next diplomatic move could test how far it’s willing to blend its economic and geopolitical playbooks.
