The United States has directed Taiwan Semiconductor Manufacturing Co. (TSMC) to suspend shipments of advanced chips to Chinese companies, primarily those used in artificial intelligence applications, effective Monday, according to a source familiar with the decision. This order from the Department of Commerce restricts exports of specific chips, notably those with a 7-nanometer or more advanced design, which are critical for AI accelerators and graphics processing units (GPUs).
The action follows recent developments involving a TSMC chip detected in a Huawei AI processor, potentially violating U.S. export controls. A report from the research firm Tech Insights, which analyzed the Huawei device, confirmed the presence of TSMC’s chip, raising concerns over export regulation compliance. Huawei, already under a U.S. trade restriction list, requires suppliers to secure licenses to ship technology to the company—a challenging process, as any approval that could support Huawei’s AI advancements is typically denied.
In response, TSMC halted shipments to China-based chip designer Sophgo after identifying a chip similar to the one found in Huawei’s Ascend 910B, an AI processor introduced in 2022 and recognized as one of China’s most sophisticated AI chips. Sources were unable to clarify how the TSMC chip made its way into the Huawei processor, but the recent directive targets several companies in an attempt to evaluate whether other firms are rerouting chips to support Huawei’s AI technologies.
As instructed by the Commerce Department, TSMC informed affected customers of the immediate suspension of chip shipments. Taiwan’s economy ministry affirmed TSMC’s compliance with export control discussions with the government, reiterating the company’s commitment to upholding both domestic and international regulations. TSMC’s spokesperson also declined additional comment but highlighted the company’s adherence to applicable laws and export controls.
The U.S. order, delivered as an “is informed” letter, circumvents the usual regulatory drafting procedures, enabling the Department of Commerce to swiftly impose new licensing requirements on selected entities. On Friday, Chinese semiconductor news site Ijiwei reported TSMC’s decision to pause the supply of chips at 7-nanometer or below to Chinese AI and GPU designers, effective November 11.
The move underscores growing bipartisan concerns in the U.S. over the efficacy of existing export restrictions on China. In 2022, similar “is informed” letters were issued to chipmakers Nvidia and AMD, limiting their export of high-performance AI chips to China, and to equipment manufacturers Lam Research, Applied Materials, and KLA, restricting tools needed to produce advanced chips. These initial restrictions eventually expanded into broader rules impacting additional companies.
The Biden administration has faced delays in updating regulations on tech exports to China. In July, reports show that the administration drafted new rules targeting specific foreign chipmaking exports and intended to add approximately 120 Chinese companies to the restricted entity list. However, despite an initial target date in August, the updated rules remain unpublished.
Featured image courtesy of Nikkei Asia
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