US-China tech war: Taipei said to be mulling curbs on asset sales in mainland China as US chip pressure mounts

Deep semiconductor industry links across the Taiwan Strait are facing another potential challenge after a report that Taipei is considering restrictions on asset sales by Taiwanese firms in mainland China, marking another step to prevent hi-tech transfers.

Taiwan’s Ministry of Economic Affairs is considering tightening rules regarding asset disposals in mainland China by Taiwanese firms, according to a Nikkei report on Wednesday. The revised rules would require firms to seek prior regulatory approval if they plan to sell any mainland-based assets to Chinese entities, according to the report, which cited unidentified sources.

The economic ministry of the self-ruled island did not immediately respond to a request for comment.

If confirmed, the rules change would allow Taipei to veto such deals and signal another stress point in economic bonds between mainland China and semiconductor powerhouse Taiwan, amid deepening technology rivalry between China and the United States.

The Nikkei report comes just two weeks after Taiwan’s ASE Group, the world’s largest chip assembly and packaging services provider, sold its four factories on the mainland to Chinese fund Wise Road Capital for about US$1.46 billion. The firm said proceeds from the sale would be used to expand operations in Taiwan.

Taipei, under the pro-independence Democratic Progressive Party, is edging closer to Washington on supply chain policy after Taiwanese chip companies including Taiwan Semiconductor Manufacturing Co (TSMC) complied with a US request not to supply sanctioned Chinese technology firms and to hand over proprietary supply chain data.