China, Taiwan, and Japan Semiconductor Exports 2026 — Why Demand for China Keeps Rising Despite Tighter Rules, and How to Run Export Controls

Hello, this is Hamamoto from TIMEWELL.

When people hear "semiconductor exports" these days, the news that comes to mind is almost always about rules getting stricter. The United States stops advanced chips from reaching China, Japan puts manufacturing equipment under a licensing regime, and even Taiwan widens its own control lists. The framework really has been getting tighter year by year. And yet, when you line up the 2025 trade statistics, an oddly contradictory picture emerges: even though the rules supposedly tightened, semiconductor exports to China actually swelled.

This paradox, in my view, is the very essence of today's semiconductor business. The rules really are tightening. But the explosive demand for generative AI is creating reasons to sell faster than the rules can keep up. So on the front lines of companies, the legal question of "are we allowed to sell this" and the sales-side wish of "if we can sell it, we want to" collide on the same deal, every single day. I think of export controls not as a device for stopping movement like a car's brakes, but as a driving skill that lets you use both the accelerator and the brakes to go fast and safe at once. In this article I will check the latest data from China, Taiwan, and Japan against primary sources, and lay out what that driving skill actually consists of.

What you will learn in this article

• How Japan's and Taiwan's semiconductor exports actually moved in 2025 (based on primary statistics)
• The true nature of the paradox in which "tighter rules" and "rising exports to China and for AI" are happening at the same time
• How the magnitude of real demand is reflected in the surge in memory prices
• The export-control practices Japanese companies should lock down now, and how to prepare for what comes next

The 2025 numbers reveal exports that grow even under tighter rules

Let me start with the primary data on the Japanese side. According to the Ministry of Finance trade statistics, full-year 2025 exports of ICs (integrated circuits, the tiny electronic components that serve as a computer's brain) reached 4.8699 trillion yen, up 6.1% year on year, while exports of semiconductor manufacturing equipment came to 4.5472 trillion yen, up 1.1% year on year[^1][^2]. What I want to draw attention to here is the difference in how the two grew. The chips themselves, the ICs, grew solidly, while the equipment used to make them stayed roughly flat. This captures the current phase well: demand for finished products is strong, but investment in equipment to build new factories is treading water amid regulation and economic caution. To put it in everyday terms, the dishes that are already cooked are selling like hotcakes, yet everyone is cautious about investing in an expanded kitchen.

For the figures specific to exports to China, an additional note of caution is needed. Reporting that cites the 2026 edition of the white paper from the Japanese Chamber of Commerce and Industry in China states that IC exports to China came to 28.663 billion dollars (about 4.6 trillion yen), up 47.9% year on year, accounting for 17.4% of all exports to China and ranking first by product category, while exports of manufacturing equipment to China fell 2.3% to 13.973 billion dollars[^3]. The headline "exports to China up 50%" is striking, but this figure appears to differ from the yen-denominated export statistics published directly by the Ministry of Finance (ICs up 6.1% overall) in its aggregation definitions, currency conversion, and data source, so the two cannot simply be treated as the same thing. Because I have not yet been able to confirm the original definitions, I will treat this here as a figure based on the white paper and the reporting. Even so, the direction itself, "ICs to China grew sharply while equipment moved from negative to flat," does not contradict the overall picture shown by the Ministry of Finance statistics, and it is worth noting that multiple sources point the same way. In other words, the real picture of 2025 was that semiconductor trade with China, far from shrinking under the rules, was swelling. This picture is not something that Japanese materials makers and trading houses can welcome at face value. Revenue grows, but a substantial portion of that revenue increasingly consists of transactions that could become violations with one misstep in compliance. Behind the rising revenue, the volume of items and documents that must be verified grows by the same amount.

Taiwan's export map was rewritten for the first time in 26 years

Next, Taiwan. According to reporting based on Taiwan Ministry of Finance statistics, in full-year 2025 the United States became Taiwan's top export destination, overtaking China (including Hong Kong), which had long held first place. This is said to be the first time the United States has been Taiwan's top export destination since 1999, a gap of 26 years[^4]. Exports to the United States reached 198.2 billion dollars, surpassing the 170.4 billion dollars of exports to China, and the US share of total exports rose to 30.9%. Meanwhile, the share for China (including Hong Kong) fell to 26.6%, dropping below 30% for the first time in 24 years[^4][^5]. For many years it was common sense that "Taiwan's largest export destination is China," so this is a fairly major shift in the tectonic plates.

What is driving this change is servers and semiconductors for generative AI. Taiwan's exports of electronics and information and communication equipment swelled, centered on shipments to the United States, repainting the whole structure of its exports. The emblematic case is TSMC, the largest contract manufacturer: on a reported basis, its full-year 2025 revenue was about 122.9 billion dollars, an increase of more than 30% year on year, high-performance computing (HPC) including AI accounted for about 58% of full-year revenue, and the company is said to expect growth of nearly 30% in US-dollar terms in 2026 as well[^13]. What is equally hard to overlook is that Taiwan itself has begun to move to the side that tightens exports. According to reporting, in June 2025 Taiwan's Ministry of Economic Affairs added about 601 firms from China, Russia, Iran, and elsewhere, including Huawei and SMIC, to its export-control list for strategic high-tech goods, requiring government permission when Taiwanese companies ship to these firms[^6]. A country that earns its living from exports is itself sealing the loopholes. This is also a preview of the "export controls of the future" that I will touch on in the latter half of this article. For more on the atmosphere I sensed on the ground in Taiwan, I also wrote about it in the COMPUTEX 2026 Taiwan report, so please refer to that as well.

Surging memory prices reveal an explosion of real demand

Behind "exports that grow even under tighter rules" lies the staggering real demand created by AI. The place where that heat shows up most clearly in the numbers is the price of memory. Memory is the component that stores the data a computer has calculated; representative types include DRAM (fast but loses its contents when the power is cut, a form of temporary storage) and NAND (storage that retains its contents even when the power is off). According to the market research firm TrendForce, DRAM contract prices in the first quarter of 2026 rose 93% to 98% from the previous quarter, and DRAM industry revenue grew 81% quarter on quarter[^8]. For the following second quarter, the outlook points to DRAM rising 58% to 63% and NAND rising 70% to 75% quarter on quarter[^7].

Prices nearly doubling within a single quarter is something that rarely happens in ordinary manufacturing. The explanation is that AI servers and data centers crave enormous amounts of memory, and as makers shifted their production capacity toward higher-margin server applications and HBM (high-bandwidth memory, the ultra-fast memory directly connected to AI chips), overall supply tightened. Even in my own conversations with executives on the ground, the voices saying "we can't read the parts situation" and "we can't put together next term's estimates" have clearly increased. Rising prices mean the world is overflowing with people who want the product. When demand is this strong, closing off one channel with rules only means trade swells through another legitimate channel. That is precisely why the work of properly managing each and every one of these growing transactions is no longer someone else's problem for companies. As for why the semiconductor industry has come to sit at the very center of economic security, I have organized the whole picture in the full map of semiconductors and economic security, so if you want to grasp it from the structure, please head there.

The rules tighten and loosen at the same time

This is the biggest crux of the article. The rules in 2026 are moving in the direction of tightening and the direction of loosening at the same time. In its final rule dated January 15, 2026, the US Department of Commerce's Bureau of Industry and Security (BIS) changed its license review policy for advanced computing semiconductors bound for China and Macau from the previous "presumption of denial" to "case-by-case review"[^9]. The scope covers roughly chips equivalent to NVIDIA's H200 and AMD's MI325X, with lines drawn by figures for total processing performance and bandwidth. In other words, the very top computing chips remain blocked while chips one notch below are treated as "potentially approvable when examined case by case," a partial easing. Furthermore, the so-called affiliates rule (the 50% rule), which automatically brings related companies in which listed firms hold 50% or more under the controls, has had its enforcement suspended for one year starting in November 2025[^10]. BIS is said to still expect companies to conduct appropriate verification during the suspension period, so even though things have loosened, there is no room for complacency.

What has been reported as the symbol of the easing is NVIDIA's sales to China. According to reporting, a plan to permit sales of the H200 and MI325X to China subject to a certain fee is in motion, and there are said to have been large orders from Chinese companies[^14]. However, the fee rate, the volume caps, and the order scale are all fluid, and it is not yet at a stage where it can be discussed as a fixed system. This is an area that must be handled carefully, with an explicit note that it is "based on reporting."

To sum up, the brake known as regulation does remain, and for some products and counterparties it has tightened further. But because the accelerator of real AI demand is so strong, my view is that the reality is closer to this: rather than "stopping everything," each country has begun to fine-tune its operations toward "drawing a line and letting some through." This line is not a fixed rule but something like a living creature that moves every quarter. For those who want to follow the regulatory moves in chronological order, the US-China AI semiconductor regulation calendar should be useful. Precisely because the line keeps moving, companies need a system that can handle "sellable but requiring management" transactions quickly and accurately. As the practical foundation for achieving both "fast and safe," we offer the export-control AI agent TRAFEED. AI supports classification decisions, transaction review, and economic-security responses, providing a foundation that lets staff escape the state of being perpetually chased by regulatory updates.

The export controls Japanese companies should lock down now

So, concretely, what should Japanese companies lock down? The starting point is the classification decision. This refers to the work of determining "whether your own products or technologies fall under the regulatory lists in the law." For semiconductor manufacturing equipment, under a rule that the Ministry of Economy, Trade and Industry promulgated in May 2023 and brought into force on July 23 of the same year, equipment for making logic semiconductors with circuit line widths of 14 nanometers and below, among other things, became subject to licensing for all destinations[^11][^15]. What matters here is the difference by destination country: items can be shipped to strictly managed countries such as the United States and the Netherlands under a comprehensive license, while individual licenses are required for countries such as China and Russia. For the same piece of equipment, the procedure changes entirely depending on whom you sell it to. This is a separate framework from the 2026 rules covering advanced semiconductors and quantum-related items, so it is safer to organize them in-house to avoid confusion.

What comes into play after the classification decision is catch-all controls. This is a mechanism under which a license can be required even for goods that are not directly on a list, depending on the use or the counterparty, and it consists of the objective requirements of end-use and end-user, plus an inform requirement under which the authorities individually issue an alert[^12]. Put plainly, "it's not on the list, so we're fine" is not necessarily true. For example, even a measuring instrument that seems perfectly ordinary must give you pause to verify if it is going to a use connected to weapons development or to a counterparty of concern. What troubles practitioners here is grasping the final end user, that is, who ultimately uses it. Once you bring into view diversion routed through China, or indirect ownership through capital relationships like the affiliates rule mentioned earlier, manually tracing the background of each business partner one firm at a time is realistically at its limit. And when the US FDPR (the rule that asserts extraterritorial jurisdiction over foreign products that contain US-origin technology) overlaps, you face multilayered verification such as "it passes under domestic law but touches US law" as seen from Japan. As with Taiwan adding Huawei and SMIC to its own list, the trend of allied countries widening their lists in step will continue, so it is realistic to assume that the number of counterparties to be verified will keep growing.

How to prepare for the future of semiconductor export controls

Finally, let me organize how to prepare for what comes next. First, it is safest to assume that the rules will neither "only tighten" nor "only loosen" but will keep moving while redrawing the line for each product and each counterparty. The top-tier AI chips are clamped down, the notch below is let through with conditions. Allied countries are handled lightly with comprehensive licenses, while countries of concern are handled heavily with individual licenses. These fine-grained lines get updated on a quarterly basis. Second, the more that line moves, the more the enormous market that is China becomes a mass of "sellable but requiring management" transactions. As the surge in memory prices shows, the real demand is genuine, and the business opportunity is certainly there. The question is whether you can seize that opportunity without missing it, while handling everything without producing a single regulatory violation.

What comes into play here is the switch from person-dependent verification to systematized verification. Continuing to inspect an ever-swelling volume of transactions on the experience and grit of individual staff alone is bound to break down eventually. Following regulatory updates, updating classification decisions, cross-checking business partners and final end users, and verifying against the overlapping jurisdictions of the United States, China, Japan, and Taiwan: building a structure now that shares this whole chain of work not only with people but with AI is, I believe, the very source of competitiveness in semiconductor exports going forward. Complying with the rules and seizing business opportunities are not, by nature, conflicting goals. It is precisely the companies that can run both on the same system that will ride the wave of exports that grow even under tighter rules. If you want to work out concretely how to handle the "sellable but requiring management" deals in your own transactions, please tell us about your current situation through an individual consultation. We will organize it together, grounded in the practicalities of export controls.

References

[^1]: Trade Statistics of Japan — Ministry of Finance — Full-year 2025 (published 2026-01-29) — https://www.customs.go.jp/toukei/ [^2]: Japan's semiconductor position seen through trade statistics — SEMICON.TODAY (organizing Ministry of Finance data) — 2026-01-29 — https://semicon.today/archives/5697 [^3]: Semiconductor exports to China rose 50% in 2025 (reporting based on the Japanese Chamber of Commerce and Industry in China white paper "The Chinese Economy and Japanese Companies 2026") — Toyo Keizai Online (via Yahoo) — 2026-06-23 — https://news.yahoo.co.jp/articles/d17480f328cad790e2c3b5cdbd6e26ac11e57b2c [^4]: United States becomes Taiwan's top export destination, overtaking China in 2025 — Nikkei (Taiwan Ministry of Finance statistics) — 2026-01-09 — https://www.nikkei.com/article/DGXZQOGM084JQ0Y5A201C2000000/ [^5]: Taiwan's exports shift to the US, China share falls below 30% for the first time in 24 years — Nikkei — 2025 — https://www.nikkei.com/article/DGXZQOGM225GF0S5A420C2000000/ [^6]: Taiwan adds Huawei, SMIC to export control list — Focus Taiwan (CNA, Taiwan Ministry of Economic Affairs announcement) — 2025-06-16 — https://focustaiwan.tw/business/202506160011 [^7]: AI Server Demand to Drive Memory Contract Price Increases in 2Q26 — TrendForce — 2026-03-31 — https://www.trendforce.com/presscenter/news/20260331-12995.html [^8]: Rapid Contract Price Surge Drives 1Q26 DRAM Industry Up 81% QoQ — TrendForce — 2026-06-01 — https://www.trendforce.com/presscenter/news/20260601-13070.html [^9]: Revision to License Review Policy for Advanced Computing Commodities — US Department of Commerce BIS (Federal Register) — 2026-01-15 — https://www.federalregister.gov/documents/2026/01/15/2026-00789/revision-to-license-review-policy-for-advanced-computing-commodities [^10]: One Year Suspension of Expansion of End-User Controls for Affiliates — US Department of Commerce BIS (Federal Register) — 2025-11-12 — https://www.federalregister.gov/documents/2025/11/12/2025-19846/ [^11]: Advanced semiconductor export controls to take effect July 23; METI amends ministerial ordinance — Nikkei — 2023-05 — https://www.nikkei.com/article/DGXZQOUA233FD0T20C23A5000000/ [^12]: Catch-all controls in security export control (Japan) — JETRO — updated as needed — https://www.jetro.go.jp/world/qa/04A-020118.html [^13]: TSMC Q4 FY2025 Results and FY2026 Outlook Signal AI-Led Growth (full-year 2025 revenue, HPC ratio, 2026 outlook) — Futurum Group — 2026-01 — https://futurumgroup.com/insights/tsmc-q4-fy-2025-results-and-fy-2026-outlook-signal-ai-led-growth/ [^14]: Nvidia prepares H200 shipments to China as chip war lines blur — Tom's Hardware — 2025-12 to 2026 — https://www.tomshardware.com/tech-industry/semiconductors/nvidia-prepares-h200-shipments-to-china-as-chip-war-lines-blur [^15]: Overview of the draft ministerial ordinance amendment adding 23 categories of semiconductor manufacturing equipment to the goods ordinance — CISTEC — 2023-04-28 — https://www.cistec.or.jp/service/doushikoku/handotai23_pubcome00.pdf