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US Imposes Ban on TSMC’s Advanced Chip Exports to China Amid AI Concerns

By  |  November 10, 2024

The United States has ordered Taiwan Semiconductor Manufacturing Co. (TSMC) to cease shipments of certain advanced microchips to its Chinese clients, a move aimed at curtailing China’s access to high-performance technology crucial for artificial intelligence (AI) development. The new restriction, which went into effect on Monday, applies specifically to TSMC’s most sophisticated chip designs, particularly those of 7 nanometers or more, according to a source familiar with the matter.

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    This measure, reportedly outlined in a letter from the U.S. Department of Commerce to TSMC, targets chips frequently used in AI acceleration and advanced graphics processing units (GPUs). These technologies are vital for powering AI-driven applications, making this a significant action in the ongoing technology competition between the U.S. and China. This restriction is expected to impact a range of Chinese companies dependent on TSMC’s chips for their AI advancements, as reported by Reuters.

    The decision comes on the heels of an incident involving a TSMC-manufactured chip discovered in Huawei’s Ascend 910B AI processor, according to a recent investigation by tech research firm Tech Insights. Per Reuters, Tech Insights uncovered this after examining the Huawei product, sparking concerns over a potential export control breach. Huawei, a company that has long faced scrutiny from U.S. regulators, remains on a restricted trade list that mandates U.S. companies and their affiliates to obtain special licenses for any technology exports that could support the company’s AI efforts.

    Following the investigation, TSMC suspended shipments to another Chinese entity, Sophgo, whose chip design closely resembled the one found in the Huawei processor. Sources told Reuters that this move reflects TSMC’s ongoing efforts to adhere to U.S. export regulations, highlighting the semiconductor giant’s willingness to comply with international trade restrictions.

    According to Reuters, the export suspension allows the U.S. government to scrutinize whether other entities in China are routing advanced chips to Huawei, potentially bypassing existing trade restrictions. TSMC has reportedly informed affected Chinese clients that shipments of the restricted chips would halt immediately, underscoring the far-reaching impact of the Commerce Department’s directive on the Chinese tech sector.

    In a statement to Reuters, Taiwan’s Ministry of Economic Affairs acknowledged TSMC’s commitment to adhering to both domestic and international regulations. The ministry noted that TSMC routinely engages in discussions with regulatory authorities regarding export controls and confirmed that the company will remain compliant with evolving regulations. Specific inquiries about TSMC’s response to the latest order, however, were redirected to the company itself.

    This latest development marks a significant escalation in the U.S.-China tech standoff, with advanced semiconductor technology now at the heart of geopolitical tension. By targeting China’s access to cutting-edge AI hardware, the U.S. hopes to curb China’s capacity to leverage these technologies for its rapidly expanding AI sector, particularly in military and surveillance applications. This move is expected to intensify efforts by Chinese firms to develop self-sufficiency in semiconductor manufacturing, an area that remains highly dependent on foreign expertise and technology.

    Source: Reuters