Taiwan authorities are considering much stricter export controls on AI chip sales to China to further align with U.S. measures, according to people familiar with the matter, an effort to address semiconductor smuggling that risks drawing a rebuke from Beijing.

The idea is to give authorities more legal tools to address diversion of advanced hardware, like AI servers with Nvidia Corp. chips, from Taiwan to China. Such sales are already banned under U.S. regulations unless companies get Washington’s permission, per curbs the U.S. first imposed in 2022 to prevent Beijing from using advanced Nvidia processors to gain a military edge.

Taiwan, however, doesn’t consider unauthorized AI chip exports to China to be a crime. While Taiwan authorities do warn the potential sellers that they may be breaking U.S. rules should they proceed, the only legal recourse through the island’s courts is to charge suspected smugglers with violations of other, existing local laws.

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