TSMC Halts Production of Advanced AI Chips for Chinese Companies Amid US-China Tech Tensions

TAIPEI, Taiwan - Taiwan Semiconductor Manufacturing Co (TSMC), the world's leading contract chipmaker, has reportedly decided to stop producing its most advanced AI chips for Chinese clients, effective this Monday. According to a Financial Times report citing three informed sources, TSMC will cease manufacturing AI chips with process nodes smaller than 7 nanometers, a move influenced by escalating US-China tech rivalry.

This decision is set against the backdrop of increasing efforts by the United States to restrict China's access to critical technology, especially in artificial intelligence. The US has introduced various restrictions on the export of high-performance GPU chips, essential for AI research and development, to China. These measures are part of Washington's strategy to prevent China from utilizing AI technology in areas such as bioweapons development or cyber warfare.

The geopolitical tension was further highlighted when the US fined GlobalFoundries, another semiconductor company, $500,000 for unauthorized chip shipments to a blacklisted Chinese entity, SMIC. This fine underscores the stringent oversight now placed on semiconductor exports to China, suggesting that any future shipments of advanced AI chips by TSMC to Chinese customers would require US approval, complicating the global supply chain dynamics.

In response to inquiries, TSMC stated, "TSMC does not comment on market rumors. TSMC is a law-abiding company and we are committed to complying with all applicable rules and regulations, including applicable export controls."

The backdrop to this corporate decision also involves an ongoing investigation by the US Department of Commerce into how a TSMC-manufactured chip ended up in a Huawei product, a company already under severe US sanctions.

This development could have significant implications for the global AI industry, potentially slowing down the pace of innovation in China while also affecting TSMC's business operations and international relations in the tech sector.

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