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Taiwan Semiconductor Manufacturing Company has notified the Chinese chip designer that it will stop producing cutting-edge artificial intelligence chips as the US government continues to thwart Beijing’s AI ambitions.
TSMC, the world’s largest contract chipmaker, has told Chinese customers that it will no longer manufacture AI chips at advanced process nodes below 7 nanometers starting Monday, three people familiar with the matter said.
If TSMC were to supply such chips to Chinese customers in the future, they would be subject to an approval process that would likely involve the U.S. government, two of the people said.
TSMC’s tightened regulations could reset the ambitions of Chinese tech giants such as Alibaba and Baidu, which have invested heavily in semiconductor designs for the AI ​​cloud, as well as a number of AI chip design startups turning to the Taiwanese group. is also increasing. Manufacturing industry.
The United States will ban U.S. companies such as Nvidia from shipping cutting-edge processors to China, and will prevent chipmakers around the world using American technology from shipping advanced AI processors to China. It also created an extensive export control system. New U.S. rules will prohibit foundries from producing advanced AI chips designed by Chinese companies, according to analysts at investment bank Jefferies.
TSMC is rolling out new policies as the U.S. Department of Commerce investigates how cutting-edge chips the group manufactured for Chinese customers ended up in Huawei’s AI devices. China’s national technology champion is subject to multiple U.S. sanctions and export controls.
People familiar with TSMC’s moves said TSMC’s decision was based on the need to improve its internal controls in the wake of an ongoing investigation, as well as the expected increase in chip supplies to China before U.S. President Joe Biden leaves office. It said it was caused by a “combination” of U.S. export controls on: office.
“We want to start easing restrictions before firm structural regulations are in place,” said one of the people involved.
The company is understood to be particularly wary of being targeted as untrustworthy or uncooperative as Donald Trump is set to become the next US president.
Earlier this year, President Trump accused Taiwan of “stealing” the U.S. semiconductor industry, saying TSMC had lost billions of dollars in subsidies from Washington to build manufacturing plants in the United States. He suggested that there is a possibility that he might move the country to his own country.
A source close to TSMC said that TSMC’s latest move is “not meant to be an example to President Trump, but rather to emphasize that we are good people and are not acting against the interests of the United States.” There is no doubt that it was.”
A breakaway from TSMC could hurt the Chinese tech giant, which has bet on making cutting-edge AI chips in Taiwan. Search giant Baidu, in particular, aims to build a full stack of software and hardware to support its AI business.
Near the center of these efforts is the company’s Kunlun series of AI chips. According to Bernstein Research, its Kunlun II processor is manufactured by TSMC at a 7-nanometer level.
“Currently, Kunlun chips are particularly suited for large-scale model inference, and will eventually become suitable for training as well,” Baidu founder Robin Li said at a conference last year. Lee added that the group has been able to reduce costs by designing its own chips.
People briefed on the situation said it was clear that TSMC’s new rules target AI processors, but it was unclear for now how broadly they would apply to other chips. China is home to a number of major startups designing AI chips for self-driving cars, including Hong Kong-listed Horizon Robotics and Black Sesame International Holding.
Executives from both groups and company documents suggest the latest generation of chips will be manufactured by TSMC at the 7-nanometer node.
Officials close to TSMC said the new regulations will not have a major impact on its bottom line. TSMC’s October sales rose 29.2% to NT$314 billion ($9.8 billion), with growth slowing slightly compared to the previous month.
TSMC said in a statement that it is “a law-abiding company and is committed to complying with all applicable rules and regulations, including applicable export controls.”
The news was first reported by Chinese media site ijiwei.com.
Nian Liu contributed reporting from Beijing.
