Taiwanese prosecutors recently indicted individuals in a case involving AI servers allegedly diverted to China in violation of export controls. Some products were originally declared for use in Taiwan but were ultimately rerouted to China through a third country. While the case ostensibly concerns export controls and inaccurate declarations, it also highlights a broader issue. As U.S.-China technology competition intensifies, export control risks have expanded beyond product classification and customs clearance to encompass the entire transaction chain, including customer identities, end uses, internal authorization, and transshipment through third countries.
Export Controls Expand from Product Reviews to the Entire Transaction Chain, Bringing Customers, End Uses, and Third-Country Transshipment under Scrutiny
Da-Nien Liu, Director of the Regional Development Study Center at the Chung-Hua Institution for Economic Research (CIER), said the United States has continued to tighten export controls as its technology rivalry with China intensifies. The focus is no longer limited to which products cannot be exported to particular destinations. Authorities are increasingly examining who the buyer is, who ultimately controls the buyer, who will use the products, and where the products will ultimately be delivered. Even if the immediate buyer is based in a third country, compliance risks may arise if the entity exercising actual control, the end user, or the ultimate end use involves a restricted jurisdiction.
Export controls are therefore no longer merely a matter of government border enforcement. They are increasingly becoming an integral part of companies’ daily operations and risk management. As transaction chains for high-tech products become more complex, companies can no longer respond effectively to the changing international trade environment by treating export controls as a routine license check performed immediately before shipment.
Simply “knowing your customer” is no longer sufficient. Companies must also understand their customers’ clients and identify the ultimate end users. Transaction reviews should examine who controls the customer’s ownership, why the customer is purchasing large quantities of sensitive equipment, whether the payment or delivery locations are unusual, and whether the products could be resold through a third country. Liu said this shows that the focus of export controls is shifting from whether a product is controlled to whether a company can identify and manage the risks of the entire transaction. Effective controls cannot rely solely on a final review before shipment. Companies must move risk management upstream to the order acceptance and transaction approval stages.
High-Tech Companies Should Implement Tiered Controls and Build Comprehensive Safeguards from Order Acceptance and Payment to Logistics
Liu indicated that Taiwan has introduced the Internal Compliance Program for exports of strategic high-tech commodities to encourage companies to establish mechanisms for customer due diligence, transaction screening, and shipment management. As more advanced products become subject to national security concerns, export controls can no longer remain solely within trade, legal, and customs departments. Companies should integrate them into internal controls, clearly assign responsibilities, establish review levels and approval procedures, and introduce cross-checking mechanisms. These controls should cover every stage of a transaction, including order acceptance, payment, logistics, and shipment.
Companies should adopt tiered controls for sensitive products, high-risk markets, and unusual customers. They should also establish mechanisms for early warnings, internal reporting, and escalated reviews of suspicious transactions. When a transaction clearly deviates from normal commercial practices, companies should verify its ultimate end use and actual destination. They should suspend the transaction when necessary to ensure that internal controls function effectively. Companies should also use digital tools to incorporate customer reviews, end-use verification, and anomaly alerts into their systems while retaining transaction and approval records. Regular audits and employee training should then be used to determine whether these controls are being properly implemented.
More importantly, boards of directors and senior management should incorporate export controls into corporate risk management. Liu said the consequences of serious violations are no longer limited to fines. They may also damage a company’s reputation, result in customer losses, and even restrict access to advanced technologies. For high-tech companies, boards must determine not only whether internal controls exist, but also whether they operate effectively.
Export Controls Become Part of Corporate Governance as Taiwanese Companies Turn Economic Security into a Core Business Capability
Liu said this shift is particularly important for Taiwan. The country is a major global production base for high-tech industries and sits at the intersection of U.S.-China technology competition and export controls. Taiwanese companies’ ability to maintain their position in international markets will depend not only on their technology, prices, and delivery capabilities, but also on whether they can integrate export controls into daily operations. Export controls are no longer merely a matter of regulatory compliance. They have become a core business capability. Companies must answer not only whether a product can be sold, but also who is buying it, who ultimately controls the buyer, how it will ultimately be used, and where it may subsequently be transferred.
Export controls are therefore no longer just a compliance obligation. They have become an integral part of corporate capabilities and economic security. The next step for Taiwanese companies is not merely to add another check before shipment. They should establish comprehensive internal safeguards covering order acceptance, customer due diligence, end-use verification, logistics, and shipment. Only by determining who is buying a product, who ultimately controls the buyer, how the product will be used, and where it may subsequently be transferred can companies reduce compliance risks and preserve Taiwan’s position as a trusted partner in global high-tech supply chains.
Source: Da-Nien Liu (September 8, 2026). Integrating Export Controls into Corporate Governance. United Daily News. https://udn.com/news/story/7340/9740343