As the United States moves to prevent advanced AI chips and servers from reaching China through third countries, Chinese companies may increasingly seek other ways to access the technology.
According to Chang Chien-yi, president of the Taiwan Institute of Economic Research and executive director of the Chinese Taipei APEC Study, Chinese companies could turn to overseas data centers and cloud computing capacity to surmount the obstacle.
The shift could mark the next phase in U.S.–China tech competition as Washington’s effort to block the physical transfer of advanced AI hardware increasingly exposes the gray areas of cross-border supply chains.
At the same time, recent investigations in Taiwan into suspected origin-labeling violations have raised concerns that companies could face greater scrutiny in the United States for Chinese-made products and components routed through Taiwan.
“The cross-border rental of computing power could become the next battlefield for U.S. controls,” Chang told The Epoch Times.
Chang’s comments came as Singaporean media outlet The Straits Times reported on Aug. 27 that the U.S. government is investigating whether a Singapore-based logistics company helped move AI systems equipped with Nvidia chips from Taiwan through the United States and Southeast Asia and ultimately into China, citing anonymous sources.
According to the report, the Commerce Department’s Bureau of Industry and Security is investigating 47 shipments handled by Apex Logistics in 2024. Some of the shipments allegedly involved AI servers subject to U.S. export controls.
The Epoch Times reached out to the Department of Commerce for comment but did not receive a reply as of publication.
The case highlights a challenge facing Washington as it seeks to restrict China’s access to advanced AI hardware. A challenge made all the more difficult as Chinese companies can exploit complex international supply chains by routing equipment through countries not subject to the same restrictions, according to Chang.
“After Chinese companies are restricted from obtaining high-end AI equipment, they will continue to look for third countries and intermediate links to circumvent the controls,” he said.
In some cases, servers could be exported from Taiwan to countries such as Singapore or Malaysia before Chinese customers acquired them through intermediaries, Chang said.
Equipment could also potentially be dismantled into individual components and shipped separately to China. That makes identifying suspicious trade patterns increasingly important, he said.
Taiwanese authorities could begin by examining export data for anomalies, particularly cases in which a company’s actual production capacity appears inconsistent with the volume of equipment it exports. Such discrepancies could indicate unauthorized shipments or false declarations and warrant further investigation, Chang said.
Authorities could also examine unusual purchasing activity in third countries.
If companies in Singapore, Japan, or Malaysia suddenly begin purchasing large quantities of advanced AI servers despite having little apparent domestic demand, officials should examine the buyers, the ultimate users, and where the equipment eventually goes, Chang said.
Chang Chien-yi, president of the Taiwan Institute of Economic Research, said the Taiwanese government could first examine Taiwan’s export data for anomalies to help prevent advanced AI servers from being diverted from Taiwan to China. Song Bilong/The Epoch Times
Taiwan’s Supply Chain Faces Another Test
The pressure on Taiwan’s technology industry is not limited to AI-server transshipment.
A recent investigation involving Taiwan-based PCB manufacturer Unimicron has also drawn attention to suspected “origin washing”—the practice of importing products made in China into Taiwan and then labeling them as Taiwanese to avoid trade restrictions or tariffs, according to an Aug. 29 report by Taiwan’s state news agency CNA, citing a press release from the Taoyuan District Prosecutors Office.
Chang warned that companies could pay a heavy price if they attempt to save money on tariffs by disguising the origin of Chinese-made products.
“If it is only to save on tariffs, importing products from China into Taiwan and then putting a ‘Made in Taiwan’ label on them is really not worth the loss,” he said.
The potential consequences, he said, extend well beyond penalties imposed by Taiwanese authorities. If U.S. authorities determine that a company violated U.S. import requirements, the company could face restrictions on imports into the United States or even be placed on a trade-control list.
“The long-term impact is far greater than the short-term savings in tariff costs,” Chang said.
The issue is becoming more consequential as the U.S.–China tech competition accelerates the development of supply chains aimed at reducing dependence on Chinese production.
“For Taiwanese companies whose main market is the United States, they should quickly adjust their global supply-chain arrangements,” Chang said.
Taiwanese Industry Minister Kung Ming-hsin said on Sept. 3 that products cannot simply be relabeled as Taiwanese if they have not undergone substantial transformation in Taiwan, according to CNA.
Simple processing or an increase in added value of less than 35 percent would not allow a company to change the product’s country of origin.
Even when a product meets Taiwan’s criteria for substantial transformation, the final determination of origin for export to the United States rests with U.S. Customs and Border Protection.
For Taiwanese manufacturers, the distinction is becoming increasingly important, according to Chang.
As Washington seeks to prevent advanced technology from reaching China and reduce reliance on Chinese supply chains, companies operating through Taiwan face growing pressure to demonstrate both where their products originate and where their technology ultimately goes.
Hou Junlin contributed to this report.
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