Taiwan targets illicit AI server exports to China with five-year prison terms

Taiwan is expanding its list of controlled exports to include AI servers and the latest chips in a move to align its policies with the U.S.’s trade bans. Bloomberg reports that after the export controls take effect, anyone caught smuggling these items will be criminally charged under the Foreign Trade Act, which carries a penalty of up to five years in prison and/or a fine of around $92,500.

“Going forward, some of our measures on controlled items will correspond to American ones because we have made quite some commitments in the Agreement on Reciprocal Trade,” Taiwan Minister of Economic Affairs Kung Ming-hsin said. The two parties signed the trade deal earlier this year, which saw the U.S. cutting tariffs on Taiwanese goods down to 15% in exchange for direct investments in the U.S. tech industry, among others.

The U.S. has long been trying to stamp out the smuggling of advanced Nvidia chips into China. One of the biggest cases that U.S. authorities have prosecuted so far includes three Super Micro employees, including its co-founder Yih-Shyan “Wally” Liaw, who are accused of smuggling $2.5 billion worth of AI servers. A few months after this revelation, Taiwanese authorities raided Super Micro’s Taipei offices in connection with the Nvidia B300 smuggling probe, which eventually led to the indictment of nine individuals related to the case.

Since Taiwan doesn’t treat AI chip exports to China as a crime before this new set of export controls is enacted, people violating the chip bans would have to be charged under other laws. This is what Singapore did when it arrested suspected Nvidia AI GPU smugglers — because it doesn’t have a law that prohibits the export of advanced AI chips to China, it instead charged the individuals with fraud and money laundering.

The expansion of the Foreign Trade Act will be one of the strictest measures that the Taiwanese government has put into place against exports to China, which is something that it has been considering earlier this year. This move will likely please Washington as it pressures other countries to take more steps in its controlling the flow of advanced AI chips into China. However, it will also likely provoke Beijing, which has already condemned Taipei after it applied export restrictions on Huawei and SMIC last year.

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