TSMC to Cease Production of Advanced AI Chips for Chinese Clients Amid US-China Tech Tensions

TAIPEI - Taiwan Semiconductor Manufacturing Co (TSMC), the world's leading contract chipmaker, has announced it will stop producing its most advanced AI chips for Chinese customers starting Monday, according to a report by the Financial Times. Sources familiar with the matter revealed that TSMC has informed its Chinese clients about the cessation of production for AI chips using process nodes smaller than 7 nanometres.

The decision aligns with escalating US-China technological rivalry, especially in the critical area of artificial intelligence. The United States has introduced several export controls intended to restrict the supply of high-performance GPU chips to China, vital for AI development. These measures are part of a broader US strategy to limit China's advancements in technology, citing concerns over potential misuse in areas like bioweapons development or cyber warfare.

In a related enforcement action, the US Department of Commerce fined GlobalFoundries, a New York-based semiconductor company, $500,000 for unauthorized shipments to a subsidiary of China's blacklisted SMIC. This incident underscores the increasing scrutiny on tech exports to China.

TSMC, in response to inquiries, stated, "TSMC does not comment on market rumour. 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 these developments includes an ongoing investigation by the US Department of Commerce into how a chip made by TSMC ended up in a Huawei product, despite sanctions against the Chinese company.

This move by TSMC could significantly disrupt the supply chain for AI technology in China, requiring future shipments to gain US approval, thereby intensifying the tech trade war between the superpowers.

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