TAIPEI/PALO ALTO, U.S. -- American and European semiconductor companies are shunning China's Huawei Technologies to abide by Washington's blacklist, but they worry that the resulting supply gap will only propel Chinese technologies to advance and eventually dominate their massive home market.

Such sentiment was on vivid display at a recent information technology show in the Taiwanese capital. "All business leaders would like [global trade issues] to be resolved as soon as possible," Advanced Micro Devices CEO Lisa Su told reporters at the Computex Taipei, one of Asia's largest tech events.

Su did not sound happy about having been forced to stop supplying the Chinese company. "Huawei is a customer of ours. They've done some very nice PCs," she said.

Executives from Qualcomm and Arm Holdings also stressed their desire to resume dealings with Huawei at the event.

"The hard-line approach by the U.S. has thrown their strategy for taming China off course," said an industry source in Taiwan.

Looking to take on China's $200 billion semiconductor market -- roughly half the global total -- the three companies each formed a joint venture there with local partners between 2016 and 2018. Tougher rules on dealing with Huawei and other key Chinese clients would deal a blow to their ambitions.

Chinese authorities shut out Google and other foreign internet platforms, allowing homegrown alternatives like Tencent Holdings to dominate the Chinese market. The country still relies on overseas players for semiconductors, but some think the same thing could happen in that sector as well.

For example, U.S.-based Synopsys, one of the market leaders in electronic design automation, has suspended transactions with Huawei. "A disruption in supply could encourage Chinese players to develop alternatives over the medium term," a Taiwanese chip researcher said.

Chinese President Xi Jinping is calling for self-reliance in order to offset the impact of U.S. regulations. Mainland players are aggressively poaching talent, leaving outside companies scrambling to match their offers, Lee Pei-ing, president of Taiwanese chipmaker Nanya Technology, said in May.

Semiconductors lie at the heart of China's push to bolster its advanced manufacturing sector. It remains unclear whether the U.S. tariffs will push Beijing into a corner or simply encourage the rise of China's own chipmakers.