A tougher regulatory framework is set to redefine how critical semiconductor technologies can move across borders
As semiconductors increasingly underpin national security, industrial competitiveness and technological sovereignty, Taiwan has progressively strengthened its legal mechanisms governing the cross-border movement of critical technologies. This article examines recent policy and regulatory developments that collectively shape Taiwan’s approach to controlling the cross-border movement of critical semiconductor technologies. It also focuses on restrictions targeting designated entities, enhanced protection of core national technologies under the National Security Act, and newly introduced outbound investment screening mechanisms.
Taiwan semiconductor export restrictions: Entity list
Tsung-Yuan Shen
Associate Partner
Lee and Li
Taipei
Tel: +886 2 2763 8000 (ext. 2539)
Email: tsungyuanshen@leeandli.com
Among the regulatory tools, export controls targeting designated counterparties represent a key feature of Taiwan’s technology control regime.
Transactions involving providing goods and technology to foreign counterparties designated on the export entity management list – published by the Ministry of Economic Affairs’ International Trade Administration (ITA) and commonly referred to as the “entity list” – are deemed to present a potential risk of military end use. This includes applications related to nuclear, biological, chemical or missile weapons, regardless of the nature of the exported goods themselves. Accordingly, such transactions are subject to scrutiny under the regulatory framework on strategic high-tech commodities (SHTCs).
The applicability of export controls to entities on the entity list (the listed entities) does not depend on the proportion of the exported component within the final product obtained by the end user. Restrictions still apply where a Taiwanese exporter supplies only a minimal component that constitutes a small fraction of the final product.
The ITA has indicated that, where an exporter supplies goods to a downstream customer who subsequently outsources processing and transfers the resulting products to an entity in the entity list (listed entity), the exporter may still be required to apply for an export permit if it has a reasonable degree of knowledge regarding the ultimate destination of the goods.
The ITA occasionally reviews and updates the entity list, and recent updates have reflected a tightening regulatory stance and a growing emphasis on entity-based risk assessment in export control enforcement.
Rachel Chen
Associate Partner
Lee and Li
Hsinchu
Tel: +886 3 579 9911 (ext. 3206)
Email: rachelchen@leeandli.com
In principle, the ITA considers that export controls against the listed entities extend beyond tangible goods to include intangible items such as software and technology. However, because enforcement mechanisms rely primarily on customs clearance procedures, regulatory practice focuses on technology that is embedded in or embodied by physical goods.
As a result, restrictions on exports of tangible items function as a principal means of indirectly controlling technology transfers, while purely intangible technology sharing or exchanges, remain comparatively difficult to regulate under the existing enforcement framework.
Under article 13 of the Trade Act, exporters must obtain prior approval for the export of SHTCs. Export transactions with the listed entities without prior approval may result in severe consequences. Pursuant to article 27 of the Trade Act, exporters may face criminal penalties of up to five years imprisonment and/or fines of up to NTD3 million (USD95,300), or administrative sanctions including fines, or temporary or permanent suspension of import/export registration.
Protecting Taiwan’s core technologies: National Security Act
In parallel with export controls, Taiwan has significantly strengthened protections for core national technologies through amendments to the National Security Act. Article 3 of the National Security Act prohibits any person, whether acting for or intending to benefit foreign countries, hostile foreign forces or organisations they establish or control, from engaging in conduct related to national core critical technology trade secrets.
Effie Peng
Attorney
Lee and Li
Hsinchu
Tel: +886 3 579 9911 (ext. 3203)
Email: effiepeng@leeandli.com
Prohibited acts include obtaining such trade secrets through improper means, using or disclosing them without authorisation, failing to delete or destroy them on request by the trade secret owner, or acquiring and using trade secrets with knowledge that they were obtained unlawfully.
“National core critical technologies” are defined as technologies where overseas transfer would materially harm national security, industrial competitiveness or economic development. They require control due to national defence or critical infrastructure protection, or because they enable world-leading technologies or significantly enhance key industries.
By the end of 2024, 32 items were included on the list of protected national core critical technologies announced by the Executive Yuan (the government’s executive branch). The list applies across a range of sectors including national defence, space, agriculture, semiconductors and information security. With respect to semiconductors, it covers sub-14 nanometre chip manufacturing processes, advanced heterogeneous integration packaging technologies, high-performance AI chip design, low-temperature semiconductor circuit design and fabrication techniques, etc. As of November 2025, it was reported that the list may be expanding to enhance protection for trade secrets related to defence, space and dual-use technologies.
In August 2025, the first criminal prosecution for violations of the National Security Act involving national core critical technology trade secrets marked a significant enforcement milestone. The case involves a former engineer at Taiwan Semiconductor Manufacturing Company (TSMC), who, after joining a Japanese semiconductor equipment supplier, allegedly solicited confidential process-related information from current employees of TSMC.
Prosecutors pressed charges against the former engineer and current employees of the company on the grounds that the stolen information concerned national core critical technologies vital to Taiwan’s industrial foundation, and posed a serious threat to the international competitiveness of the semiconductor industry.
Prosecutors further emphasised that the Japanese company, as the employer, bore a statutory duty of supervision over its employee. Finding that the company lacked concrete preventive and compliance measures beyond general internal warnings, it was also charged with corporate criminal liability with significant fines.
Regulating overseas technology investments in Taiwan
Taiwan’s efforts to prevent technology outflows have also extended into the realm of outbound investment regulation.
To address concerns over the transfer of critical technologies and potential national security risks, amendments passed in April introduced a new approval regime under article 22 of the Industrial Innovation Act. Under the revised provision, in addition to the existing thresholds based on investment amount, outbound investments involving designated countries or regions, or those of specific industries or technologies, must obtain prior approval from the competent authority before implementation.
Where particular circumstances are identified, such as risks to national security or adverse impacts on economic development, authorities may deny approval, in whole or in part, or grant conditional approval subject to specific undertakings. New penalty provisions under article 67-3 of the Industrial Innovation Act further authorise administrative fines and/or orders to rectify or withdraw investment.
Although these provisions have not yet entered into force, the Ministry of Economic Affairs has indicated that implementation will follow the revision of the subsidiary Regulations Governing Overseas Investment by Companies.
Market attention has focused on whether the regulations will formally codify the so-called “N-1” principle, under which overseas semiconductor manufacturing processes must lag at least one generation behind those deployed in Taiwan. While not expressly stated in current regulations, officials have acknowledged that N-1 considerations already factor into investment reviews and may play a more explicit role once the new regime takes effect.
Conclusion
Taiwan has adopted a tightening regulatory framework governing cross-border technology transfers. By regulating exports, protecting core trade secrets linked to talent mobility and reviewing outbound investments, this framework addresses technology flows through goods, people and capital. As a result, cross-border collaboration in high-tech sectors increasingly requires careful navigation of Taiwan’s evolving regulatory and compliance landscape.
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