TSMC Halts Advanced AI Chip Production for China Amid US Restrictions

Taiwan Semiconductor Stock Drops as US Orders Halt on AI Chip Sales to China - Taiwan Semiconductor (NYSE:TSM)

Taiwan Semiconductor confirms compliance but seeks flexibility amid significant Chinese market share. In response to mounting U.S. pressures, Taiwan Semiconductor Manufacturing Co TSM faces new constraints from Washington, prohibiting advanced AI chip sales to mainland China. The U.S. Department of Commerce recently instructed Taiwan Semiconductor to cease supplying China with sophisticated chips -- of 7 nanometers or more advanced designs -- that support AI and graphics processing capabilities. This directive, which took effect on Monday, reflects ongoing U.S. efforts to limit China's access to vital technological resources, the Global Times reports. Also Read: ASML's IT Outage Affected Chipmaking Operations Worldwide Taiwan Semiconductor stock is trading lower Monday after the report. Visible Alpha by S&P Global Market Intelligence data reveals that Taiwan Semiconductor's third-quarter revenue saw 11% contribution from mainland China, while North America contributed 71%. Given China's substantial revenue to Taiwan Semiconductor, this mandate puts the chipmaker in a challenging position as it navigates between regulatory compliance and retaining business. Analysts suggest that while Taiwan Semiconductor will likely adhere to the order, it may explore ways to negotiate specific terms, hoping to limit the impact on customers outside the AI sector. The Economic Daily News quoted Taiwan Semiconductor insiders indicating the company is actively strategizing how to respond to these new regulations. Ma Jihua, a telecom industry expert, told the Global Times that although Taiwan Semiconductor cannot wholly resist U.S. regulations, it will likely seek flexibility in areas less impacted by the restrictions. He noted that, like other major semiconductor companies, Taiwan Semiconductor's dependence on the Chinese market makes it challenging to disengage entirely. Taiwan Semiconductor issued a statement confirming its compliance with international laws and export controls, emphasizing its position as a "law-abiding" entity. ASML Holding NV ASML, another major player in the semiconductor industry, faces similar challenges. Peter Wennink, its former CEO, has previously told the Global Times that ASML would continue selling to China despite restrictions, given that the market contributes about 30% of the company's orders. In the past seven months, Chinese semiconductor exports reached approximately $89 billion, up nearly 26% from the previous year. Additionally, China's domestic chip production has surged, with self-sufficiency rising from about 33% in 2013 to almost 80% by mid-2024. Analysts told the Global Times that this domestic growth reflects China's efforts to reduce reliance on foreign suppliers as the geopolitical landscape remains uncertain. Recently, Taiwan Semiconductor reaffirmed its commitment to a $65 billion U.S. investment despite Donald Trump's recent election and critical remarks. The company stated it will proceed with its advanced chip production facilities in Arizona. Trump had previously criticized Taiwan's semiconductor role and the Chips Act, favoring tariffs over subsidies. Taiwan Semiconductor stock surged over 92% year-to-date. Price Actions: TSM stock is down 3.88% to $193.40 at the last check on Monday. Also Read: Taiwan Semi and GlobalFoundries Finalize Major US Funding Deals, Eye Growth in Chip Manufacturing Photo by wakamatsu.h via Shutterstock This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Market News and Data brought to you by Benzinga APIs

What Is Going On With Taiwan Semiconductor Stock On Tuesday? - Taiwan Semiconductor (NYSE:TSM)

Analysts expect broader restrictions on TSMC's AI chip shipments, potentially extending curbs to CPUs and auto chips. Taiwan Semiconductor Manufacturing Co TSM stock is trading lower Tuesday as Chinese chip firms anxiously await updates from Taiwan Semiconductor, concerned about expanded bans impacting key industries like smartphones and autonomous vehicles, SCMP reports. TrendForce analysts told the SCMP that Taiwan Semiconductor will likely implement broader curbs on advanced AI chip shipments to mainland China following U.S. export restrictions. TrendForce noted Taiwan Semiconductor's ongoing evaluation of client vetting and product reviews, suggesting potential near-term restrictions beyond AI chips, possibly affecting CPUs and automotive chips. Also Read: Blink Charging Q3 Earnings: Revenue Miss, Product Sales Slump, 2024 Outlook Cut & More Taiwan Semiconductor stock is trading lower on Tuesday. Morningstar analyst Phelix Lee highlighted concerns to SCMP that Taiwan Semiconductor's expanded curbs could severely impact mainland China's chip design sector as local foundries like Semiconductor Manufacturing International Corporation (SMIC) struggle to meet demand for advanced nodes. He noted that SMIC's capacity remains limited due to U.S. export controls on crucial tools. Mainland China accounted for 11% of Taiwan Semiconductor's third-quarter revenue, per Visible Alpha by S&P Global Market Intelligence data. On Tuesday, the Taiwan Semiconductor Board approved capital expenditures of approximately $15.5 billion for fab construction, installation of fab facility systems, installation of advanced technology capacity, and 2025 R&D capital investments. The board also approved the sale of unsecured corporate bonds in multiple offerings in the domestic market, totaling up to 60 billion New Taiwan Dollars. Last week's reports indicated that Taiwan Semiconductor's U.S. investment strategy remains intact despite Donald Trump's presidential win and his constant digs at Taiwan. The contract chip maker's $65 billion Arizona expansion remains on track. Taiwan Semiconductor stock gained over 89% year-to-date. Is Taiwan Semi Stock A Good Buy? An investor or trader's decision to buy or sell a stock is unique to their time horizon and risk tolerance. Many typical investors evaluate earnings growth and valuation on a particular stock before making a decision. For example, for Taiwan Semiconductor, you'll notice that earnings in its last quarter grew 7.78% source. As an investor, you'll want to decide whether that's better or worse than what you'd like to see among stocks in your portfolio. On the valuation side, Taiwan Semiconductor's price to earnings ratio - a measure of how much an investor pays for the company's earnings - is grown 84.46% in the current quarter when compared with last year. That places it below similar businesses NVIDIA, Broadcom, Advanced Micro Devices in its sector. You'll need to decide whether that makes it more or less attractive based on how you think the company will perform over time. There are many different valuation metrics that may help you make a decision. Find more on Taiwan Semiconductor's quote page, or if you'd like a deeper dive in an advanced program, try Benzinga PRO for free. Price Actions: TSM stock is down 1.95% at $190.28 at the last check on Tuesday. Also Read: Sony's Q2 Profit Surges on Gaming And Sensor Gains, But PS5 Sales Decline, Raises Full-Year Outlook Photo by Ivan Marc via Shutterstock This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Market News and Data brought to you by Benzinga APIs

US Asks Nvidia, Apple Supplier TSMC To Halt Shipments To China After Its Chip Was Found In Huawei AI Processor: Report - Taiwan Semiconductor (NYSE:TSM)

The U.S. has reportedly asked Nvidia, Apple's key supplier Taiwan Semiconductor Manufacturing Co TSM to halt shipments of chips used in AI applications to customers from China. What Happened: The U.S. asked TSMC to not ship the advanced chips starting Monday in a letter from the Department of Commerce, Reuters reported, citing a person familiar with the matter. The order pertains to certain chips, of 7 nanometers or more advanced designs, that power AI accelerator and graphics processing units, the report said. The U.S. Department of Commerce reportedly sent the letter to TSMC weeks after the company informed the department that one of its chips had been found in a Huawei AI processor. Huawei is on the U.S.' restricted trade list, mandating suppliers to get licenses for any goods or technology shipped to the company. Why It Matters: It is not evident how the TSMC chip ended up on Huawei's Ascend 910B "multi-chiplet" processor. However, TSMC has notified its affected clients from China that it is suspending shipments of the chips starting Monday, the report said. The Commerce Department sent similar letters to Nvidia and AMD restricting their ability to export AI chips to China in 2022. The restrictions imposed in those letters were later turned into rules, Reuters noted. Read Next: Lucid CEO Scrambles For Damage Control As Shares Plunge 47% This Year: 'As A Major Shareholder...Believe Me, Nobody Is More Incentivized Than Me For Success' Image via Shutterstock Market News and Data brought to you by Benzinga APIs

TSMC is cutting China off from its advanced AI chips

Taiwan Semiconductor Manufacturing Company (TSM+0.20%) is following U.S. efforts to curb China's artificial intelligence ambitions, reportedly telling chip design firms in the country it will stop producing their most advanced AI chips. The Taiwanese chipmaker told its Chinese customers it is no longer manufacturing AI chips with the advanced 7 nanometer process or smaller starting on Monday, the Financial Times reported, citing unnamed people familiar with the matter. If TSMC does produce the advanced chips for Chinese firms in the future, the U.S. government would likely be involved in an approval process, the people said. Chinese media site ijiwei first reported the news, according to the Financial Times. While TSMC is targeting advanced AI chips, people told the Financial Times they are unsure if the rules will affect other chips that China's leading chip firms are designing. The rules will reportedly have a minimal impact on TSMC's revenue. TSMC said it is a "law-abiding company and we are committed to complying with all applicable rules and regulations, including applicable export controls," in a statement shared with the Financial Times. The company did not immediately respond to a request for comment from Quartz. The chipmaker reportedly made the decision to cut off Chinese firms to improve internal controls, and in anticipation of updated U.S. export controls on chips sold to China by the outgoing Biden administration. TSMC is also reportedly worried about being targeted by the incoming Trump administration, which has accused Taiwan of stealing chip manufacturing from the U.S. "We want to start mitigating before there are solid, structured regulations," a person told the Financial Times. Another person said TSMC's decision is "not a show for Trump but definitely designed to underscore that we are the good guys and not acting against US interests." TSMC's new rules come as the chipmaker faces an investigation into how its advanced chip technology ended up in a cutting-edge AI accelerator from sanctioned Chinese tech giant Huawei. Canadian research firm TechInsights took apart Huawei's chip and reportedly found the TSMC-made tech. Meanwhile, TSMC's production yields -- or the number of functional chips it can produce per manufacturing process -- at its Phoenix, Arizona site are about four percentage points higher than those of comparable fabrication sites in Taiwan, Bloomberg reported. It has also reportedly started making its first chips for Apple at the Phoenix-based fab.

TSMC to close door on producing advanced AI chips for China from Monday

Taiwan Semiconductor Manufacturing Company has notified Chinese chip design companies that it will suspend production of their most advanced artificial intelligence chips, as Washington continues to impede Beijing's AI ambitions. TSMC, the world's largest contract chipmaker, told Chinese customers it would no longer manufacture AI chips at advanced process nodes of 7 nanometres or smaller as of this coming Monday, three people familiar with the matter said. Two of the people said any future supplies of such semiconductors by TSMC to Chinese customers would be subject to an approval process likely to involve Washington. TSMC's tighter rules could reset the ambitions of Chinese technology giants such as Alibaba and Baidu, which have invested heavily in designing semiconductors for their AI clouds, as well as a growing number of AI chip design start-ups that have turned to the Taiwanese group for manufacturing. The US has barred American companies like Nvidia from shipping cutting-edge processors to China and also created an extensive export control system to stop chipmakers worldwide that are using US technology from shipping advanced AI processors to China. There have been reports that a new US rule would ban foundries from making advanced AI chips designed by Chinese firms, according to analysts at investment bank Jefferies. TSMC is rolling out its new policy as the US Commerce Department investigates how cutting-edge chips the group made for a Chinese customer ended up in a Huawei AI device. The Chinese national tech champion is subject to multiple US sanctions and export controls. People familiar with TSMC's move said its decision was driven by a "combination" of the need to improve internal controls in the wake of that ongoing probe and the next wave of US export controls on chip supplies to China, expected before US President Joe Biden leaves office. "We want to start mitigating before there are solid, structured regulations," one of the people said. The company is understood to be particularly wary of being targeted as unreliable or uncooperative as Donald Trump is set to become the next US president. This year, Trump accused Taiwan of "stealing" the US chip industry, and suggested TSMC could move its production back home after pocketing billions of dollars in subsidies from Washington for building fabrication plants in the US. A person close to TSMC said its move was "not a show for Trump but definitely designed to underscore that we are the good guys and not acting against US interests". Being cut off from TSMC could hurt Chinese tech giants that have bet on making their most advanced AI chips in Taiwan. Search giant Baidu, in particular, is aiming to build a full stack of software and hardware to underpin its AI business. Near the centre of those efforts is its Kunlun series of AI chips. Its Kunlun II processor is made by TSMC on its 7-nanometre level of miniaturisation, according to Bernstein Research. "Kunlun chips are now especially well-suited for large model inference and will eventually be suitable for training," Baidu founder Robin Li told a conference last year. Li added that the group had been effective in cutting costs by designing its own chips. The people briefed on the situation said TSMC's new rules were clear in targeting AI processors, but it was so far unclear how widely that would be applied to other chips. China has a number of leading start-ups designing AI chips for self-driving, including Hong Kong-listed Horizon Robotics and Black Sesame International Holding. Executives and company materials at both groups have indicated their newest generation of chips would be made by TSMC on the 7-nanometre node. The people close to TSMC said its new restrictions would not have a major impact on its revenue. TSMC's October revenue increased 29.2 per cent to NT$314bn ($9.8bn), a slight deceleration of growth compared with preceding months. In a statement, TSMC said it was a "law-abiding company and we are committed to complying with all applicable rules and regulations, including applicable export controls". The news was first reported by Chinese media site ijiwei.com.

TSMC to stop supplying advanced AI processors for all of its China customers: Report

After unintentionally producing an AI chiplet for Huawei via a proxy, TSMC is set to stop supplying sophisticated AI processors for all of its Chinese clients from Monday, November 11, reports Financial Times, citing Ijiwei.com, which in turn cited emails sent by the foundry to its customers. This change concerns advanced process technologies (such as 7nm and below) and will have a significant impact on China-based developers of AI processors. This does not, however, mean that TSMC will cease to serve these customers completely. The new restriction is limited to AI processors and AI GPUs made on 7nm-class and lower nodes. Smartphone processors, chips for automotive applications, and other devices that cannot be used for military or dual-use applications are not affected, the Ijiwei report stated. Sources with knowledge of the matter reportedly told Ijiwei that future supplies of advanced AI processors to China-based entities would require some kind of approval process, which likely involves specialists from the U.S. Department of Commerce. It is unclear what TSMC plans to do with wafers containing advanced processors already in production, as well as with already processed wafers sitting in its stock. Perhaps, they will be shipped to actual customers if they get appropriate export licenses. TSMC currently makes AI processors for chip giants like Alibaba and Baidu (which are mentioned specifically in the FT report) that produce their custom processors (such as Kunlun and Kunlun II) at TSMC. TSMC also fabs hardware for several AI processor designers, such as Horizon Robotics and Black Sesame International Holding, that design processors for applications like self-driving cars, according to Financial Times. For all of these companies, the new restriction will likely be a major setback, as they are highly dependent on processors made by TSMC. The U.S. has already banned American firms, including AMD, Intel, and Nvidia, from selling their most advanced AI and HPC processors to Chinese entities and has also created extensive export controls aimed at stopping other developers and manufacturers using U.S. technology from developing and producing such processors for Chinese companies. Nonetheless, chip developers (including China-based and U.S.-based Nvidia) have either tweaked the designs of their processors to meet U.S. export rule requirements or obtained an export license from the U.S. Department of Commerce. SMIC succeeded in legally importing advanced wafer-fabbing tools from American companies to its 'legacy' production facilities, only then using them at advanced fabs to make sophisticated chips for Huawei. As for Huawei, it used proxies to order chips from TSMC. In fact, the foundry's decision follows a probe by the U.S. Commerce Department into how sophisticated chips produced by TSMC for a Chinese customer ended up in a Huawei AI device, despite Huawei being under multiple U.S. sanctions. TSMC's new restrictions reflect both a desire to strengthen its own internal controls and to prepare for expected U.S. export limitations on chip sales to China before President Biden's term ends. Sources familiar with TSMC's plans told the Financial Times that the new restrictions are unlikely to significantly affect the company's revenue. In an official statement, TSMC did not outright confirm that it had sent the aforementioned email to its Chinese clients, but it emphasized its commitment to being a 'law-abiding company,' dedicated to adhering to all relevant rules and regulations, including export control requirements.

The U.S. tells TSMC it can't send advanced AI chips to China anymore

The U.S. has reportedly ordered the world's largest chipmaker not to send its advanced artificial intelligence chips to China anymore. Taiwan Semiconductor Manufacturing Company (TSM0.00%) was told to stop shipping advanced AI chips to Chinese customers starting Monday, Reuters reported, citing an unnamed person familiar with the matter. The Department of Commerce told the Taiwanese chipmaker in a letter that it is imposing export restrictions on advanced chips made with the 7-nanometer process or smaller, the person said. Meanwhile, TSMC reportedly told its Chinese customers it is no longer manufacturing AI chips with the advanced 7-nanometer process or beyond starting Monday, the Financial Times reported, citing unnamed people familiar with the matter. If TSMC does produce the advanced chips for Chinese firms in the future, the U.S. government would likely be involved in an approval process, the people said. They told the Financial Times they are unsure if the rules will affect other chips that China's leading chip firms are designing. The rules will reportedly have a minimal impact on TSMC's revenue. TSMC said it is a "law-abiding company and we are committed to complying with all applicable rules and regulations, including applicable export controls," in a statement previously shared with Quartz. It declined to comment further. The chipmaker reportedly made the decision to cut off Chinese firms to improve internal controls and in anticipation of updated U.S. export controls on chips sold to China by the outgoing Biden administration. TSMC is also reportedly worried about being targeted by the incoming Trump administration, which has accused Taiwan of stealing chip manufacturing from the U.S. TSMC's new rules come as the chipmaker faces an investigation into how its advanced chip technology ended up in a cutting-edge AI accelerator from sanctioned Chinese tech giant Huawei. Canadian research firm TechInsights took apart Huawei's chip and reportedly found the TSMC-made tech. The Taiwan-based company is also facing rules at home that restrict it from producing 2-nanometer chips abroad, the Taipei Times reported. J.W. Kuo, Taiwan's minister of economic affairs, said that although the company will eventually produce the advanced chips abroad, "its core technology will stay" on the island. "Since Taiwan has related regulations to protect its own technologies, TSMC cannot produce 2-nanometer chips overseas currently," Kuo said during a meeting with Taiwan's Economics Committee, according to the Taipei Times.

Exclusive-US ordered TSMC to halt shipments to China of chips used in AI applications, source says

NEW YORK/SINGAPORE (Reuters) - The U.S. ordered Taiwan Semiconductor Manufacturing Co to halt shipments of advanced chips to Chinese customers that are often used in artificial intelligence applications starting Monday, according to a person familiar with the matter. The Department of Commerce sent a letter to TSMC imposing export restrictions on certain sophisticated chips, of 7 nanometer or more advanced designs, destined for China that power AI accelerator and graphics processing units (GPU), the person said. The U.S. order, which is being reported for the first time, comes just weeks after TSMC notified the Commerce Department that one of its chips had been found in a Huawei AI processor, as Reuters reported last month. Tech research firm Tech Insights had taken apart the product, revealing the TSMC chip and apparent violation of export controls. Huawei, at the center of the U.S. action, is on a restricted trade list, which requires suppliers to obtain licenses to ship any goods or technology to the company. Any license that could aid Huawei's AI efforts would likely be denied. TSMC suspended shipments to China-based chip designer Sophgo after its chip matched the one found on the Huawei AI processor, sources told Reuters last month. Reuters could not determine how the chip ended up on Huawei's Ascend 910B, released in 2022, viewed as the most advanced AI chip available from a Chinese company. The latest clampdown hits many more companies and will allow the U.S. to assess whether other companies are diverting chips to Huawei for its AI processor. As a result of the letter, TSMC notified affected clients that it was suspending shipments of chips starting Monday, the person said. The Commerce Department declined comment. A spokesperson for TSMC also declined to comment beyond saying it was a "law-abiding company...committed to complying with all applicable rules and regulations, including applicable export controls." The Commerce Department communication -- known as an "is informed" letter -- allows the U.S. to bypass lengthy rule-writing processes to quickly impose new licensing requirements on specific companies. Ijiwei, a Chinese media site covering the semiconductor industry, reported on Friday that TSMC notified Chinese chip design companies it would suspend 7 nanometer or below chips for AI and GPU customers beginning Nov. 11. The action comes as both Republican and Democratic lawmakers have raised concerns about the inadequacy of export controls on China and the Commerce Department's enforcement of them. In 2022, the Commerce Department sent is-informed letters to Nvidia and AMD restricting their ability to export top AI-related chips to China, and to chip equipment makers like Lam Research, Applied Materials and KLA to restrict tools to make advanced chips to China. The restrictions in those letters were later turned into rules that apply to companies beyond them. The U.S. has been delayed in updating rules on tech exports to China. As Reuters reported in July, the Biden administration drafted new rules on some foreign exports of chipmaking equipment and planned to add about 120 Chinese companies to the Commerce Department's restricted entity list, including chipmaking factories, toolmakers, and related companies. But despite plans for an August release, and later tentative target dates for publication, the rules still have not been issued. (Reporting by Karen Freifeld and Fanny Potkin; editing by Chris Sanders and Chizu Nomiyama)

Exclusive: US ordered TSMC to halt shipments to China of chips used in AI applications

NEW YORK/SINGAPORE, Nov 9 (Reuters) - The U.S. ordered Taiwan Semiconductor Manufacturing Co (2330.TW), opens new tab to halt shipments of advanced chips to Chinese customers that are often used in artificial intelligence applications starting Monday, according to a person familiar with the matter. The Department of Commerce sent a letter to TSMC imposing export restrictions on certain sophisticated chips, of 7 nanometer or more advanced designs, destined for China that power AI accelerator and graphics processing units (GPU), the person said. The U.S. order, which is being reported for the first time, comes just weeks after TSMC notified the Commerce Department that one of its chips had been found in a Huawei AI processor, as Reuters reported last month. Tech research firm Tech Insights had taken apart the product, revealing the TSMC chip and apparent violation of export controls. Huawei, at the center of the U.S. action, is on a restricted trade list, which requires suppliers to obtain licenses to ship any goods or technology to the company. Any license that could aid Huawei's AI efforts would likely be denied. TSMC suspended shipments to China-based chip designer Sophgo after its chip matched the one found on the Huawei AI processor, sources told Reuters last month. Reuters could not determine how the chip ended up on Huawei's Ascend 910B, released in 2022, viewed as the most advanced AI chip available from a Chinese company. The latest clampdown hits many more companies and will allow the U.S. to assess whether other companies are diverting chips to Huawei for its AI processor. As a result of the letter, TSMC notified affected clients that it was suspending shipments of chips starting Monday, the person said. The Commerce Department declined comment. A spokesperson for TSMC also declined to comment beyond saying it was a "law-abiding company...committed to complying with all applicable rules and regulations, including applicable export controls." The Commerce Department communication -- known as an "is informed" letter -- allows the U.S. to bypass lengthy rule-writing processes to quickly impose new licensing requirements on specific companies. Ijiwei, a Chinese media site covering the semiconductor industry, reported on Friday that TSMC notified Chinese chip design companies it would suspend 7 nanometer or below chips for AI and GPU customers beginning Nov. 11. The action comes as both Republican and Democratic lawmakers have raised concerns about the inadequacy of export controls on China and the Commerce Department's enforcement of them. In 2022, the Commerce Department sent is-informed letters to Nvidia and AMD restricting their ability to export top AI-related chips to China, and to chip equipment makers like Lam Research, Applied Materials and KLA to restrict tools to make advanced chips to China. The restrictions in those letters were later turned into rules that apply to companies beyond them. The U.S. has been delayed in updating rules on tech exports to China. As Reuters reported in July, the Biden administration drafted new rules on some foreign exports of chipmaking equipment and planned to add about 120 Chinese companies to the Commerce Department's restricted entity list, including chipmaking factories, toolmakers, and related companies. But despite plans for an August release, and later tentative target dates for publication, the rules still have not been issued. Reporting by Karen Freifeld and Fanny Potkin; editing by Chris Sanders and Chizu Nomiyama Our Standards: The Thomson Reuters Trust Principles., opens new tab

TSMC to Suspend AI Chips Production for China From November 11: Report

TSMC said it complies with all regulations including export controls Taiwan Semiconductor Manufacturing Co (TSMC) has notified Chinese chip design companies that it is suspending production of their most advanced AI chips from Monday, the Financial Times reported, citing three people familiar with the matter. TSMC, the world's largest contract chipmaker, told Chinese customers it would no longer manufacture AI chips at advanced process nodes of 7 nanometres or smaller, FT said on Friday. The U.S. has imposed a raft of measures aimed at restricting the shipment of advanced GPU chips - which enable AI - to China to hobble its artificial intelligence capabilities, which Washington fears could be used to develop bioweapons and launch large-scale cyberattacks. Earlier this month, the U.S. imposed a $500,000 penalty on New York-based GlobalFoundries for shipping chips without authorization to an affiliate of blacklisted Chinese chipmaker SMIC. Any future supplies of the advanced AI chips by TSMC to Chinese customers would be subject to an approval process likely to involve Washington, according to the FT report. "TSMC does not comment on market rumour. TSMC is a law-abiding company and we are committed to complying with all applicable rules and regulations, including applicable export controls," the company said. The U.S. Department of Commerce did not immediately respond to a Reuters request for comment. The move to restrict exports to China comes at a time when the U.S. Department of Commerce is investigating how a chip produced by the Taiwanese chipmaker ended up in a product made by China's heavily sanctioned Huawei.

US ordered TSMC to halt shipments to China of chips used in AI applications: source

This photo shows the logo of TSMC (Taiwan Semiconductor Manufacturing Company) during the Taiwan Innotech Expo at the World Trade Center in Taipei, Taiwan, Oct. 14, 2022. AP-Yonhap The U.S. ordered Taiwan Semiconductor Manufacturing to halt shipments of advanced chips to Chinese customers that are often used in artificial intelligence applications starting Monday, according to a person familiar with the matter. The Department of Commerce sent a letter to TSMC imposing export restrictions on certain sophisticated chips, of 7 nanometer or more advanced designs, destined for China that power AI accelerator and graphics processing units (GPU), the person said. The U.S. order, which is being reported for the first time, comes just weeks after TSMC notified the Commerce Department that one of its chips had been found in a Huawei AI processor, as Reuters reported last month. Tech research firm Tech Insights had taken apart the product, revealing the TSMC chip and apparent violation of export controls. Huawei, at the center of the U.S. action, is on a restricted trade list, which requires suppliers to obtain licenses to ship any goods or technology to the company. Any license that could aid Huawei's AI efforts would likely be denied. TSMC suspended shipments to China-based chip designer Sophgo after its chip matched the one found on the Huawei AI processor, sources told Reuters last month. Reuters could not determine how the chip ended up on Huawei's Ascend 910B, released in 2022, viewed as the most advanced AI chip available from a Chinese company. The latest clampdown hits many more companies and will allow the U.S. to assess whether other companies are diverting chips to Huawei for its AI processor. As a result of the letter, TSMC notified affected clients that it was suspending shipments of chips starting Monday, the person said. The Commerce Department declined comment. A spokesperson for TSMC also declined to comment beyond saying it was a "law-abiding company...committed to complying with all applicable rules and regulations, including applicable export controls." The Commerce Department communication -- known as an "is informed" letter -- allows the U.S. to bypass lengthy rule-writing processes to quickly impose new licensing requirements on specific companies. Ijiwei, a Chinese media site covering the semiconductor industry, reported on Friday that TSMC notified Chinese chip design companies it would suspend 7 nanometer or below chips for AI and GPU customers beginning Nov. 11. The action comes as both Republican and Democratic lawmakers have raised concerns about the inadequacy of export controls on China and the Commerce Department's enforcement of them. In 2022, the Commerce Department sent is-informed letters to Nvidia and AMD restricting their ability to export top AI-related chips to China, and to chip equipment makers like Lam Research, Applied Materials and KLA to restrict tools to make advanced chips to China. The restrictions in those letters were later turned into rules that apply to companies beyond them. The U.S. has been delayed in updating rules on tech exports to China. As Reuters reported in July, the Biden administration drafted new rules on some foreign exports of chip-making equipment and planned to add about 120 Chinese companies to the Commerce Department's restricted entity list, including chip-making factories, toolmakers, and related companies. But despite plans for an August release, and later tentative target dates for publication, the rules still have not been issued. (Reuters)

TSMC halts advanced chip shipments to Chinese AI companies

Move to suspend 7 nm and smaller processes follows US pressure Semiconductor giant TSMC is expected to stop supplying chips made with 7 nm or smaller processes to customers in China that are developing AI processors or GPUs. The move is reportedly to ensure it remains compliant with US export restrictions. The Taiwan-based megacorp, the largest semiconductor contract manufacturer worldwide, is said to have notified AI/GPU chip companies in China that it will halt shipments to them of 7 nm and more advanced silicon, starting from November 11. This follows events last month when TSMC reportedly tipped off US officials that a Chinese customer appeared to be trying to circumvent export controls against China-based tech firm Huawei by placing orders for a chip resembling Huawei's Ascend 910B GPU. It was later claimed that the biz halted all shipments to the customer in question, alleged to be chip designer Sophgo, although the latter denied the claims. Now TSMC is suspending production of advanced silicon for Chinese clients developing products aimed at high-performance computing, GPUs, and AI-related applications, as reported by Nikkei Asia and Taiwan-based industry watcher TrendForce, which cites Chinese-language media outlet ijiwei. This will not affect Chinese customers wanting 7 nm chips from TSMC for other applications such as mobile and communications, according to Nikkei, which said the overall impact on the chipmaker's revenue is likely to be minimal. TrendForce further cites another China-based source who claims the move was at the behest of the US Department of Commerce, which informed TSMC that any such shipments should not proceed unless approved and licensed by its BIS (Bureau of Industry and Security). We asked the agency for confirmation. Any moves by the silicon supremo is likely to be out of caution to pre-empt accusations from Washington that it isn't doing enough to prevent advanced technology from getting into the hands of Chinese entities that have been sanctioned. As TrendForce notes, it "highlights the foundry giant's delicate position in the global semiconductor supply chain amid the heating chip war between the world's two superpowers." For example, TSMC was awarded billions under the US CHIPS and Science Act toward building fabrication plants in the state of Arizona, an arrangement that may be reviewed under the Trump administration, it was suggested earlier this week. TSMC neither confirms nor denies the reports. A spokesperson told us: "TSMC does not comment on market rumor ... TSMC is a law-abiding company and we are committed to complying with all applicable rules and regulations, including applicable export controls." The semiconductor maker recently reported a strong third quarter 2024 with revenue of $23.50 billion, an increase of 36 percent over the same period last year, with chip output from its most advanced process nodes - 3 nm and 5 nm - now accounting for more than half of that. ®

US ordered TSMC to halt shipments to China of chips used in AI applications, source says

NEW YORK/SINGAPORE: The US ordered Taiwan Semiconductor Manufacturing Co to halt shipments of advanced chips to Chinese customers that are often used in artificial intelligence applications starting Monday, according to a person familiar with the matter. The Department of Commerce sent a letter to TSMC imposing export restrictions on certain sophisticated chips, of 7 nanometer or more advanced designs, destined for China that power AI accelerator and graphics processing units (GPU), the person said. The U.S. order, which is being reported for the first time, comes just weeks after TSMC notified the Commerce Department that one of its chips had been found in a Huawei AI processor, as Reuters reported last month. Tech research firm Tech Insights had taken apart the product, revealing the TSMC chip and apparent violation of export controls. Huawei, at the center of the U.S. action, is on a restricted trade list, which requires suppliers to obtain licenses to ship any goods or technology to the company. Any license that could aid Huawei's AI efforts would likely be denied. TSMC suspended shipments to China-based chip designer Sophgo after its chip matched the one found on the Huawei AI processor, sources told Reuters last month. Reuters could not determine how the chip ended up on Huawei's Ascend 910B, released in 2022, viewed as the most advanced AI chip available from a Chinese company. The latest clampdown hits many more companies and will allow the U.S. to assess whether other companies are diverting chips to Huawei for its AI processor. As a result of the letter, TSMC notified affected clients that it was suspending shipments of chips starting Monday, the person said. The Commerce Department declined comment. A spokesperson for TSMC also declined to comment beyond saying it was a "law-abiding company...committed to complying with all applicable rules and regulations, including applicable export controls." The Commerce Department communication -- known as an "is informed" letter -- allows the U.S. to bypass lengthy rule-writing processes to quickly impose new licensing requirements on specific companies. Ijiwei, a Chinese media site covering the semiconductor industry, reported on Friday that TSMC notified Chinese chip design companies it would suspend 7 nanometer or below chips for AI and GPU customers beginning Nov. 11. The action comes as both Republican and Democratic lawmakers have raised concerns about the inadequacy of export controls on China and the Commerce Department's enforcement of them. In 2022, the Commerce Department sent is-informed letters to Nvidia and AMD restricting their ability to export top AI-related chips to China, and to chip equipment makers like Lam Research, Applied Materials and KLA to restrict tools to make advanced chips to China. The restrictions in those letters were later turned into rules that apply to companies beyond them. The U.S. has been delayed in updating rules on tech exports to China. As Reuters reported in July, the Biden administration drafted new rules on some foreign exports of chipmaking equipment and planned to add about 120 Chinese companies to the Commerce Department's restricted entity list, including chipmaking factories, toolmakers, and related companies. But despite plans for an August release, and later tentative target dates for publication, the rules still have not been issued.

US Commerce Department Restricts TSMC AI Chip and GPU Exports to China

The United States Department of Commerce has placed an export ban on Taiwan Semiconductor Manufacturing Company (TSMC), preventing the company from sending certain artificial intelligence (AI) chips and graphics processing units (GPUs) to China. This measure aims to control the flow of advanced semiconductor technologies that could enhance China's AI capabilities. In response, TSMC has notified its Chinese customers about halting the production of specific advanced AI chips. The affected chips are produced using a 7-nanometer process or smaller, making them key components in AI accelerators and GPUs, as reported by Reuters. The export ban follows a US government investigation into how Huawei, a leading Chinese telecommunications firm, was able to develop its Ascend 910B AI chip using TSMC's technology. In late October, research firm TechInsights discovered that Huawei had utilized TSMC's advanced manufacturing processes for its AI chip. TSMC shared these findings with the US government and suspected that one of its customers had supplied a batch of chips to Huawei without authorization. Consequently, TSMC has stopped delivering chips to that customer and has implemented a production halt for certain AI chips. This halt, which TSMC had communicated to its Chinese customers in October and November, took effect today. The restriction on TSMC is part of a larger US strategy to limit the export of high-performance semiconductor technologies to China. In 2022, the US government extended export bans to include major technology firms like Nvidia and AMD, stopping the export of powerful computing chips to the Chinese market. The current ban also affects non-American semiconductor manufacturers such as TSMC, preventing them from supplying AI processors that use American technology to Chinese companies. These actions are intended to slow China's technological and military progress by restricting access to advanced semiconductor technologies. Source: Reuters

US Said to Have Ordered TSMC to Halt AI Chips Shipments to China

Shipments of chips of 7 nanometer or below for AI have been suspended The US ordered Taiwan Semiconductor Manufacturing Co to halt shipments of advanced chips to Chinese customers that are often used in Artificial Intelligence (AI) applications starting Monday, according to a person familiar with the matter. The Department of Commerce sent a letter to TSMC imposing export restrictions on certain sophisticated chips, of seven nanometer or more advanced designs, destined for China that power AI accelerator and graphics processing units (GPU), the person said. The US order, which is being reported for the first time, comes just weeks after TSMC notified the Commerce Department that one of its chips had been found in a Huawei AI processor, as Reuters reported last month. Tech research firm Tech Insights had taken apart the product, revealing the TSMC chip and apparent violation of export controls. Huawei, at the center of the US action, is on a restricted trade list, which requires suppliers to obtain licenses to ship any goods or technology to the company. Any license that could aid Huawei's AI efforts would likely be denied. TSMC suspended shipments to China-based chip designer Sophgo after its chip matched the one found on the Huawei AI processor, sources told Reuters last month. Reuters could not determine how the chip ended up on Huawei's Ascend 910B, released in 2022, viewed as the most advanced AI chip available from a Chinese company. The latest clampdown hits many more companies and will allow the US to assess whether other companies are diverting chips to Huawei for its AI processor. As a result of the letter, TSMC notified affected clients that it was suspending shipments of chips starting Monday, the person said. The Commerce Department declined comment. "TSMC has had regular discussions with the government on export control issues and has made it clear that it will comply with domestic and international regulations," Taiwan's economy ministry said in a statement to Reuters, referring specific questions to TSMC. A spokesperson for TSMC also declined to comment beyond saying it was a "law-abiding company...committed to complying with all applicable rules and regulations, including applicable export controls." The Commerce Department communication - known as an "is informed" letter - allows the US to bypass lengthy rule-writing processes to quickly impose new licensing requirements on specific companies. Ijiwei, a Chinese media site covering the semiconductor industry, reported on Friday that TSMC notified Chinese chip design companies it would suspend seven nanometer or below chips for AI and GPU customers beginning November 11. The action comes as both Republican and Democratic lawmakers have raised concerns about the inadequacy of export controls on China and the Commerce Department's enforcement of them. In 2022, the Commerce Department sent is-informed letters to Nvidia and AMD restricting their ability to export top AI-related chips to China, and to chip equipment makers like Lam Research, Applied Materials and KLA to restrict tools to make advanced chips to China. The restrictions in those letters were later turned into rules that apply to companies beyond them. The US has been delayed in updating rules on tech exports to China. As Reuters reported in July, the Biden administration drafted new rules on some foreign exports of chipmaking equipment and planned to add about 120 Chinese companies to the Commerce Department's restricted entity list, including chipmaking factories, toolmakers, and related companies. But despite plans for an August release, and later tentative target dates for publication, the rules still have not been issued. © Thomson Reuters 2024

U.S. ordered TSMC to halt shipments of advanced AI processors to China: Report

TSMC may not have voluntarily cut shipments of advanced AI processors to Chinese entities, as reported last week. Rather, it was ordered to do so by the U.S. government, according to a South China Morning Post report published earlier today. The U.S. Department of Commerce issued a notice to TSMC imposing export controls on advanced AI processors and GPUs made on technologies that are produced on a 7nm-class or more advanced fabrication process. The regulation does not cover chips for automotive and consumer devices. This action was prompted by a recent discovery: a TSMC-manufactured chiplet was found in an AI processor developed by Huawei, which suggested a breach of existing export regulations. Indeed, it was promptly discovered that Huawei used a proxy to plant an order at TSMC. Last month, TSMC notified the U.S. Commerce Department after research company TechInsights disassembled a Huawei AI server and identified HiSilicon's Ascend 910 processor with a TSMC-made chiplet in it. Since Huawei is on a U.S. trade restriction list, companies are required to obtain a U.S. export license to supply any product containing 25% of American technology to it. It just so happens that almost any advanced product is designed or made using well over 25% of technologies developed in America. With the latest U.S. Commerce Department directive, more companies are subject to scrutiny to prevent potential rerouting of advanced processors to Huawei. While companies like Alibaba and Baidu are to some degree competitors to Huawei, the U.S. government considers them allies due to their origin. When the news about TSMC cutting the supply of advanced AI processors to Chinese entities broke a few days ago, we were a bit surprised. Typically foundries do not voluntarily halt shipments, as it hurts their revenue and margins. But apparently, TSMC's action was not exactly voluntary. Both TSMC and the U.S. Commerce Department have largely declined to provide additional comments, with TSMC stating only that it follows all legal and regulatory guidelines, including export controls.

US ordered TSMC to halt shipments to China of chips used in AI applications, source says

The U.S. ordered Taiwan Semiconductor Manufacturing Co to halt shipments of advanced chips to Chinese customers that are often used in artificial intelligence applications starting Monday, according to a person familiar with the matter. The Department of Commerce sent a letter to TSMC imposing export restrictions on certain sophisticated chips, of 7 nanometer or more advanced designs, destined for China that power AI accelerator and graphics processing units (GPU), the person said. The U.S. order, which is being reported for the first time, comes just weeks after TSMC notified the Commerce Department that one of its chips had been found in a Huawei AI processor, as Reuters reported last month. Tech research firm Tech Insights had taken apart the product, revealing the TSMC chip and apparent violation of export controls. Huawei, at the center of the U.S. action, is on a restricted trade list, which requires suppliers to obtain licenses to ship any goods or technology to the company. Any license that could aid Huawei's AI efforts would likely be denied. TSMC suspended shipments to China-based chip designer Sophgo after its chip matched the one found on the Huawei AI processor, sources told Reuters last month. Reuters could not determine how the chip ended up on Huawei's Ascend 910B, released in 2022, viewed as the most advanced AI chip available from a Chinese company.

TSMC will stop making 7 nm chips for Chinese customers

Taiwan Semiconductor Manufacturing Company has notified Chinese chip design companies that it will suspend production of their most advanced artificial intelligence chips, as Washington continues to impede Beijing's AI ambitions. TSMC, the world's largest contract chipmaker, told Chinese customers it would no longer manufacture AI chips at advanced process nodes of 7 nanometers or smaller as of this coming Monday, three people familiar with the matter said. Two of the people said any future supplies of such semiconductors by TSMC to Chinese customers would be subject to an approval process likely to involve Washington. TSMC's tighter rules could reset the ambitions of Chinese technology giants such as Alibaba and Baidu, which have invested heavily in designing semiconductors for their AI clouds, as well as a growing number of AI chip design start-ups that have turned to the Taiwanese group for manufacturing. The US has barred American companies like Nvidia from shipping cutting-edge processors to China and also created an extensive export control system to stop chipmakers worldwide that are using US technology from shipping advanced AI processors to China. There have been reports that a new US rule would ban foundries from making advanced AI chips designed by Chinese firms, according to analysts at investment bank Jefferies. TSMC is rolling out its new policy as the US Commerce Department investigates how cutting-edge chips the group made for a Chinese customer ended up in a Huawei AI device. The Chinese national tech champion is subject to multiple US sanctions and export controls. People familiar with TSMC's move said its decision was driven by a "combination" of the need to improve internal controls in the wake of that ongoing probe and the next wave of US export controls on chip supplies to China, expected before US President Joe Biden leaves office. "We want to start mitigating before there are solid, structured regulations," one of the people said.

TSMC will reportedly stop making advanced AI chips for Chinese companies

It recently discovered that Huawei used its AI chips, which violates US sanctions. Taiwan Semiconductor Manufacturing Company (TSMC) has suspended the production of advanced AI chips for Chinese companies, according to the Financial Times. The Taiwanese semiconductor chip manufacturer has reportedly notified its clients from China that it will stop producing AI chips for them, particularly models 7 nanometers and smaller, starting this Monday. If a Chinese company orders products that fall within that category, they'll have to go through an approval process that'll likely involve the US government. The manufacturer's new policy could be a direct result of its discovery that Huawei had used its chips in AI accelerators without its knowledge. A Canadian research firm called TechInsights was the one that notified the company that it discovered the presence of TSMC-manufactured products in Huawei's hardware. It was a violation of the trade sanctions the US Commerce Department had imposed against Huawei way back in 2020 that prevented it from acquiring chips made by foreign firms. More recently, it revoked its licenses that allowed Intel and Qualcomm to manufacture chips for its devices. TSMC reported TechInsights' findings to the US Commerce Department, which is now investigating how it had happened. The company denied any working relationship with Huawei and also stopped selling its chips to the client it believes had been illegally forwarding them to the Chinese brand. The Times' sources said that TSMC made the decision to suspend the production of AI chips for Chinese clients altogether, because it wants to show the US government that it's "not acting against US interests." Its new policy could have a big impact on the AI efforts of its Chinese clients. Baidu, for instance, had plans to build hardware for its AI business powered by a series of chips made by TSMC.

TSMC reportedly halts advanced chip shipments to Chinese companies

After a chip manufactured by Taiwan Semiconductor Manufacturing Company was found inside a Huawei processor, the US Department of Commerce has ordered the company to halt shipments of advanced chips to Chinese customers, according to a report in Reuters. Huawei faces significant trade restrictions from the US, so the pause on shipments is supposed to allow the government to determine whether other companies are diverting chips to Huawei. TSMC reportedly notified affected customers that it will be halting shipments starting Monday. The advanced chips being targeted are often used for artificial intelligence applications -- an area where the US has already been restricting chip exports from companies like Nvidia. In a statement provided to Reuters and other publications, TSMC said it is "committed to complying with all applicable rules and regulations, including applicable export controls."

U.S. ordered TSMC to halt shipments to China of chips used in AI applications, source says

The U.S. ordered Taiwan Semiconductor Manufacturing Co. to halt shipments of advanced chips to Chinese customers that are often used in artificial intelligence applications starting Monday, according to a person familiar with the matter. The Department of Commerce sent a letter to TSMC imposing export restrictions on certain sophisticated chips, of 7 nanometer or more advanced designs, destined for China that power AI accelerator and graphics processing units (GPU), the person said. The U.S. order, which is being reported for the first time, comes just weeks after TSMC notified the Commerce Department that one of its chips had been found in a Huawei AI processor. Research firm Tech Insights had taken the product apart, revealing the TSMC chip, an apparent violation of export controls.

US blocks TSMC chip exports, but Apple's chips face a different threat | AppleInsider

A US order to TSMC to cut AI chip supplies to China over Huawei sanctions won't cause problems for Apple. However, Taiwan's prohibition of TSMC producing 2-nanometer chips elsewhere could make an impact. U.S. sanctions against Huawei has caused problems for TSMC over attempts by intermediaries to order certain AI-based chip designs on Huawei's behalf. From Monday, TSMC is suspending shipments of the AI-focused chips to China, on the orders of the United States. The Department of Commerce imposed export restrictions of select chip designs that were intended to be shipped to China, an unnamed source of Reuters claims. The shipment ban, which kicks in from Monday, affects certain types of chips made with 7-nanometer processes or advanced designs, intended for AI or graphics processing. TSMC has already informed affected clients about the export change and the scheduling of its implementation. The order is a natural progression of a probe by the Department of Commerce into TSMC's inadvertent sanctions breach from October 18. The investigation looked into whether TSMC was willfully supplying Huawei with the chips and whether it knew that the intermediary was working on Huawei's behalf. While at the time it was not advised which company was working for Huawei, TSMC has been proactive in working with the Commerce Department. The chip maker warned that there was an attempt to violate sanctions via an intermediary, a technique the probe was examining. Reuters added that the intermediary was Sophgo, a China-based chip designer. The chip matched one used in the Huawei AI processor. "TSMC has had regular discussions with the government on export control issues and has made it clear that it will comply with domestic and international regulations," said Taiwan's economic ministry in a statement. TSMC similarly insists it was a "law-abiding company" that is "committed to complying with all applicable rules and regulations, including applicable export controls." The blocked shipments by the Department of Commerce certainly impacts TSMC's sales with Huawei, but it could also cause other problems. For a start, a blanket ban of supplying AI chips to other Chinese firms, or to chip designers who may supply other firms but could potentially do the same to Huawei, cuts sales and shipments for TSMC. While TSMC is a highly in demand chip foundry, it still means an immediate drop in chip production, since the U.S. prevents it from fulfilling some of its orders. Lower production means it has to shift around its production line to maximize the utility of its facilities. For its relatively new Arizona production plant, its relatively low amount of production could make it a viable facility to temporarily mothball. While largely risking the Arizona investment temporarily, the order probably won't do much to harm Apple's supplies from the company. Apple relies on assembly partners in China to produce its products, including the iPhone, and TSMC's chips therefore need to be imported. As chips that have AI benefits in the form of the Neural Engine, this is the sort of chip that the Commerce Department is wary about handing over to Huawei. However, with the exception of a small amount of A16 chips produced in the Arizona facility, the vast majority of its chips are made elsewhere, including in Taiwan. While there is an intention for Apple chips to be made in the United States via TSMC's Arizona facility, it may not necessarily get to produce cutting-edge chips. Taiwan Minister of Economic Affairs J. W. Kuo said on Thursday that TSMC must keep producing chips using the latest production processes in its home country, reports Taipei Times. Specifically, the creation of chips using a 2-nanometer process. "Since Taiwan has related regulations to protect its own technologies, TSMC cannot produce 2-nanometer chips overseas currently," Kuo told the Economics Committee in Taipei. "Although TSMC plans to make 2-nanometer chips [abroad] in the future, its core technology will stay in Taiwan." Kuo's comments were a response to claims TSMC may have to produce chips using advanced 2-nanometer processes ahead of schedule, following the election won by President-elect Donald Trump. Currently, the A17 Pro and A18 chips are made on a 3-nanometer process. However, it is reckoned that the iPhone 18 Pro will have chips using a 2-nanometer process. Under Taiwanese law, domestic chip manufacturers are allowed to produce chips elsewhere. The catch is that they must be at least one generation behind fabrication facilities operated in Taiwan. TSMC currently plans to make 2-nanometer and more advanced chips at its Arizona facilities by 2030, according to the company's roadmap. The first fab is soon to ramp up 4-nanometer chip production next month. The second fab, which will go live in 2028, will work on 3-nanometer and 2-nanometer lines, and a third will deal with 2-nanometer and smaller technologies. Unless Taiwan changes its laws, TSMC will have to create and use even more advanced manufacturing processes to allow 2-nanometer chip production to start in the United States. For Apple, this means it cannot take advantage of TSMC's newer chip processes for any chips made in the United States. Instead, it will have to rely on TSMC's slightly older tech for US-based production, while maintaining existing out-of-US manufacturing for the fastest, newest chips.

The U.S. Reportedly Ordered TSMC To End 7nm And Below Shipments To Chinese Customers, As Any One Of Them Could Aid Huawei's Ambitions

TSMC recently notified various Chinese customers through email that it would no longer provide these companies with chip shipments of 7nm and below technologies, and given that Donald Trump recently won the Presidential election, we doubt that these two events are mere coincidences. According to the latest report, the U.S. was indeed the driving force when it comes to forcing the Taiwanese semiconductor behemoth to halt chip supply for its overseas clients, as there is a possibility that any one of these entities could somehow be linked to Huawei. An individual familiar with the matter informed Reuters that The Department of Commerce sent a letter to TSMC imposing export restrictions on certain sophisticated chips bearing a lithography of 7nm and below. These semiconductors were to be sold to Chinese customers and would be leveraged for AI accelerators and GPUs. These trade restrictions came just a week after TSMC notified the Department of Commerce that one of its chips had been found in a Huawei AI processor. Just recently, shipments to Sophgo, a China-based chip designer, were stopped when it was discovered that the company's silicon matched the same one found on a Huawei-branded unit. The report says that this particular Huawei chip launched in 2022, making it puzzling as to how a recent shipment could have been mixed up, but it could just be another tactic employed by U.S. authorities to stifle China's capabilities in the semiconductor race. Huawei has attempted to circumvent the U.S. trade ban by working closely with China's biggest foundry, SMIC, with both entities actually witnessing some success in their self-sufficiency journey by developing the 5nm process. Unfortunately, due to the high production costs and low yields of making wafers on this lithography, thanks to the use of older-generation DUV machinery, it does not look like this architecture can be utilized on a larger scale. Instead, Huawei could resort to using the 6nm technology for the upcoming Kirin 9100, which will likely have a better transistor count than SMIC's 7nm variant, but it still shows that China-based companies are playing catch-up compared to other players. Huawei has attempted to poach TSMC engineers by offering them triple their current salaries to jumpstart its chipmaking ambitions, but it has yet to witness any success in this area.