TSMC will halt production of AI chips for Chinese firms produced using a 7nm node or lower starting on Monday.
The Financial Times reported that TSMC, the top foundry in the world, will stop producing cutting-edge AI chips for customers in China on Monday. Three people with knowledge of the situation were quoted by the Financial Times. More specifically, according to the source, TSMC has informed chip design companies that it will halt production of advanced AI devices made using process nodes of 7nm or below. This is in line with US sanctions that prohibit the export of cutting-edge GPU chips to China. AI is made possible by these chips.
The United States is worried that China would employ AI chips to strengthen its military capabilities if it can get them. The United States fined GlobalFoundries $500,000 earlier this month for sending chips to SMIC, the biggest foundry in China and the third largest globally after TSMC and Samsung Foundry, without authorization.
Chip shipments to a customer were stopped by TSMC last month after some of the chips that were made for the customer showed up in a Huawei AI gadget. According to reports, the U.S. Commerce Department is looking into this in great detail. The Commerce Department and possibly the White House would need to approve any further TSMC sales of AI chips to China. Since 2020, American-made foundries have been prohibited from supplying Huawei with advanced processors.
“TSMC stays silent on market rumors. As a law-abiding business, TSMC is dedicated to abiding by all relevant laws, rules, and regulations, including export controls.-TSMC spokesperson
According to today’s news, Chinese IT companies like Alibaba and Baidu will suffer as a result of TSMC’s decision to halt the shipments of AI chips to China. Both of those companies had invested a significant amount of money in creating chips for their AI clouds, which they hoped TSMC would produce. Securities firm Jefferies has speculated that the Commerce Department would soon release a new export regulation that would prohibit foundries from producing cutting-edge AI chips created by Chinese companies.
Regarding TSMC, the company’s decision to halt manufacturing cutting-edge AI chips for Chinese customers indicates that it is aware of its vulnerability and needs to strengthen its internal controls. Before President Joe Biden departs the White House in January, the United States may publish the next set of export restrictions on chips to China.
According to others, TSMC is taking this action to demonstrate to President-elect Donald Trump that it can adhere to American regulations. Trump said earlier this year that TSMC was stealing the American semiconductor sector and that the business could return billions of dollars to Taiwan for constructing three factories in Arizona using U.S. subsidies. Trump’s assertion was refuted by Taiwan’s economy minister.
“We lost our chip business to Taiwan. Really, how foolish are we? All of our chip business was taken by them. They have a great deal of wealth.-Donald Trump in the race for president
According to TSMC, the decision to halt Chinese AI chip manufacturing is not a show for Trump but rather serves to emphasize that we are the good guys and are not working against US interests.