TSMC has informed its AI chip customers in mainland China via an official email that it will suspend the supply of all chips manufactured using 7nm and more advanced processes to AI/GPU customers in the region, effective November 11.
The decision is a temporary strategy forced by the requirements of the US government, a TSMC insider told Chinese media outlet Icsmart.
Why it matters: This suspension points to the escalating impact of US-China tech tensions, potentially disrupting the AI advancements and operations of Chinese tech firms. The US’s chip bans may affect global supply chain strategies and prompt shifts towards self-sufficiency and alternative suppliers in China.
Details: The US is attempting to impose broad restrictions on Chinese companies using TSMC’s 7nm and below processes, while TSMC has been negotiating to limit the impact to AI chip customers.
- The US was shocked by the behavior of a previously sanctioned Chinese company that used “middlemen” to place orders with TSMC, securing advanced process capacity for its self-developed AI chips, according to Icsmart. This incident has led the US to believe it is necessary to block such attempts to bypass the new semiconductor restrictions on China. If new rules are introduced to close these loopholes, TSMC will be one of the first to be affected.
- The US is aiming to impose a blanket restriction on Chinese companies using TSMC’s 7nm and below advanced processes for all chip manufacturing. However, TSMC hopes that restrictions will apply specifically to Chinese companies involved in AI chips, without impacting other customers, such as those in the smartphone chip sector.
- TSMC is currently discussing how to respond to the new US regulations, an insider told Icsmart, and negotiations are ongoing regarding the impact on customers beyond AI chips.
Context: Last week, Donald Trump won the US presidential election, and the country is now in the transition period between the current Biden administration and the upcoming Trump administration. It is uncertain whether the current Biden administration will introduce new semiconductor restrictions on China before Trump officially takes office or leave it to the Trump administration to handle.
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