The Trump administration has considered strengthening business ties with Taiwanese technology firms. The US has been ramping up global supply chain restrictions against China while working against Huawei.
Taiwan Semiconductor Manufacturing Company (TSMC) announced that it would establish a factory in Arizona, thereby opening a supply chain opportunity between the US and Taiwan on tech products.
The Secretary of State Mike Pompeo announced that US President Donald Trump has decided to decouple the American tech industry away from China. A day after the announcement, the US Department of Commerce announced changes to the rules that affect Huawei. At present, TSMC's business is limited from engaging with Huawei.
The decision to consider Taiwan as the prime business partner of American tech companies was a move by the US to challenge China's trade relationship with Taiwan. The Chinese Communist Party once claimed that the country is a democracy, but a renegade province of China. China also claimed to have supported Taiwan's independence.
The Trump administration was said to be targeting countries that have close ties with China. The report claimed that Taiwan has been economically and politically in tune with Beijing, stated Eswar Prasad, a professor at Cornell University.
The established Commerce Department rules barred global companies from using American technology in producing and designing tech chips. The move was said to prevent these companies from selling their products to third parties such as Huawei.
Despite the new rules, the companies were said to have continued the production of chips that would be sold to Huawei producers, partners, and customers. These included companies that manufactured Huawei devices and phones.
The rule could also compel Huawei and its suppliers to reorganize their operations to prevent a halt of productions. The US, on the other hand, could also impose the rule more strictly to close the loophole where the use of American tech would be sold to Huawei.
According to a technology policy analyst with Eurasia Group Paul Triolo, a considerable part of Huawei's business lies in the hands of the US Commerce Department. He claimed that current Huawei operations involve the use of American tech and that the prohibition could disrupt its business.
In an email, Commerce Secretary Wilbur Ross revealed that the department would impose strict penalties against front companies that do not comply with the prohibition. He said that any collusion with Huawei of its affiliates would be a violation of the said mandate. He also noted that those found in violation of the new rule would be barred from gaining access to US equipment or software.