Taiwan’s landmark decision to impose strict export controls on microprocessors destined for SA marks a significant escalation in its semiconductor diplomacy with potentially devastating consequences for SA’s economy and investment climate.
The move comes amid diplomatic tensions triggered by the ANC’s hostile posturing towards Taiwan and its representative office in SA.
This posturing included an embarrassing, ultimately unsuccessful relocation order demanding the office relocate from Pretoria to Joburg by a set deadline, as well as the subsequent unilateral downgrading and renaming of the Taiwan office by the ANC-controlled department of international relations & co-operation.
Taiwan dominates the global semiconductor market, with companies such as Taiwan Semiconductor Manufacturing Company producing 50%-70% of all semiconductors worldwide, including more than 90% of the most advanced chips used in artificial intelligence, electric vehicles, and hi-tech industries.
The newly introduced export controls require prior government approval for 47 key semiconductor products, including integrated circuits and memory chips, severely compromising SA businesses reliant on these critical components.
As opposed to a more comprehensive multilateral sanctions package, these export controls serve as a calibrated test of SA’s response and a diplomatic nudge, offering the ANC an opportunity to “course correct” its diplomatic engagement with Taiwan to avoid further escalation.
This approach by Taiwan echoes the strategic export restrictions the US has long imposed on semiconductor exports to China, aiming to curb China’s technological and military advancements. Both cases use control over critical semiconductor technology as a tool to exert geopolitical pressure without declaring a halt to bilateral trade.
Should diplomatic relations deteriorate further, Taiwan is likely to consider expanding these controls into a multilateral regime with co-operation from countries that dominate semiconductor manufacturing, such as the US, Japan and South Korea.
China’s inability to produce the latest generation chips at advanced nodes further strengthens Taiwan’s leverage, as Beijing cannot readily replace Taiwan’s exports to SA.
Chinese semiconductor companies have struggled to close the gap with Taiwan primarily due to limited access to cutting-edge manufacturing technologies, such as extreme ultraviolet lithography.
Additionally, China’s semiconductor ecosystem lacks the integrated supply chain and deep engineering talent pool that Taiwan has cultivated over decades, hindering its ability to scale advanced chip production sustainably and efficiently.
Not only are automotive manufacturing and artificial intelligence development at risk, but the nation’s fast-growing data centre industry and mobile telecommunications sector are highly exposed as well.
Taiwanese chips power a wide range of devices, including Apple iPhones, Nvidia graphics cards, AI computing systems, laptops and desktops with Intel or AMD processors, and Android smartphones using Qualcomm or MediaTek chips, as well as equipment such as modems, routers, and set-top boxes in which Broadcom components are common.
For SA, the economic consequences of Taiwan’s chip restrictions are sweeping and severe. Not only are automotive manufacturing and artificial intelligence development at risk, but the nation’s fast-growing data centre industry and mobile telecommunications sector are highly exposed as well.
Disruptions to semiconductor supply chains could delay or derail new data centre projects, increase costs for mobile services and smart devices, stall innovation in emerging tech, and chip away at SA’s competitiveness across its entire digital economy.
DA MP Ryan Smith summed up the stakes for SA: “Taiwanese semiconductor chips are crucial components in the production of any modern electronic device … The local automotive industry, for example, is dependent on these chips to account for about R300bn in annual automotive exports … creating tens of thousands of local jobs.”
With the Trump administration lying in wait to find yet another reason to sanction SA, the ANC’s misguided policy moves towards Taiwan have only fanned the flames. The uncertainty ahead risks deterring foreign and domestic investment, shaking confidence in SA’s prospects as a regional hub on the continent.
Taiwan’s strategic use of export controls to safeguard diplomatic interests conveys a powerful message: advanced technology is no longer just a commercial commodity but a central pillar of national power.
Navigating this challenge will require skilful diplomacy on the part of SA’s political leadership — something we should not hold our breath waiting for.
• Kajee is a lecturer at Southern Utah University, a nonresident research fellow at the Korea Institute for Maritime Strategy, and a researcher for the SeaLight maritime transparency initiative at Stanford University’s Gordian Knot Center for National Security Innovation.
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