American companies have stopped doing business with Huawei since the US Commerce Department blacklisted the Chinese telecom giant in May and banned transactions with it and the 68 companies under its umbrella.

Yet some Taiwanese businesses have chosen not to severe ties, as they continue to ship components to or provide original equipment manufacturing for Huawei, despite the company being accused of snooping on communications on the island for Beijing.

For instance, it has been reported that the US move to backlist Huawei has not stopped Taiwan Semiconductor Manufacturing Company (TSMC) from selling its chips, and the latter has insisted that it was contractually required  to supply components, though other leading semiconductor foundries, including GlobalFoundries, United Microelectronics Corp, Toshiba and SK Hynix, have announced that they would comply with the US sanctions.

Reuters reported in May that TSMC, the world’s largest contract chipmaker, had assured Huawei that its shipments would continue, unaffected by the US ban aimed at curbing Huawei’s access to American technology.

TSMC insists its chips for Huawei are not covered by the US ban. Photo: CNA

TSMC previously said it would continue supplying Huawei for the time being, and that it was assessing the impact of Washington’s decision to limit access to goods incorporating US technology.

A TSMC statement stressed that while intellectual property and materials used for semiconductor development would be subject to US restrictions, it has determined that chipmaking equipment is not covered by the new rules and its chips would not breach rules requiring a license for sales to Huawei of products containing 25% or more US technology, after seeking legal advice.

Taiwan’s Premier Su Tseng-chang has said that a few unscrupulous companies must not be allowed to hurt the island’s image when doing business with Huawei, but he declined to answer questions about whether his remarks were aimed at TSMC or if it would be subject to a crackdown.

The island has launched a purge of Huawei, banning its products and locking them out of government procurement, and an ongoing review of all the gear and equipment currently in use at various agencies to gut them of Huawei components.

The government has warned that Huawei’s partners may contravene the US sanctions as well as local laws and may even face sanctions themselves.

Policymakers are mulling authorizing the Ministry of Economic Affairs and National Security Agency to introduce a licensing regime to inspect and control the export of sensitive high-tech products like semiconductor parts and components as well as data storage devices, according to Taiwan’s Central News Agency.