Taiwan Semiconductor Manufacturing Company (TSMC) has announced its suspension of all AI chip sales to Chinese semiconductor design firms. TSMC will no longer produce AI chips seven nanometres or smaller in size for clients in mainland China. Requests for exemptions will be subject to a new approvals process, sources added. The development follows the discovery of TSMC chips in products sold by Chinese companies currently sanctioned by the US, including Huawei.
TSMC reiterated its commitment to the sanctions regime in a statement to the FT, which broke the story. The firm, it said, was a “law-abiding company and we are committed to complying with all applicable rules and regulations, including applicable export controls.”
TSMC caught between US sanctions and China ties
Founded in 1987, TSMC quickly took advantage of competitive salaries and production costs in Taiwan to become the world’s pre-eminent semiconductor manufacturer. Unlike competitors like Intel and Samsung, the Taiwanese firm almost exclusively produces chips according to designs volunteered by clients, taking advantage of competitive salaries, production costs and state subsidies on the island nation to maintain its pre-eminent position in the sector.
Like many firms in Taiwan, TSMC has maintained historically close ties with electronics firms in the People’s Republic of China. Up until now, therefore, it has maintained a careful balance between its commitments to clients on the mainland and the US government, which in recent years has sought to blunt the growth of China’s semiconductor sector. So far, this enmity has resulted in several rounds of sanctions and rules preventing US firms like Nvidia from selling advanced CPUs and GPUs to Chinese customers.
A new set of export controls is widely expected to be implemented before the end of this year, with more to follow under the new Trump administration. TSMC itself may be subject to increased scrutiny as a result, following news that some of its more advanced chips had been used in products manufactured by sanctioned Chinese firms, seemingly without TSMC’s knowledge. According to a report by the New York Times, this included the Ascend 910B, a processor manufactured by the controversial telecommunications giant Huawei.
At the time, officials from TSMC seemed keen to cooperate with incipient investigations into its activities in China by the US Department of Commerce. An unnamed Taiwanese official told the Grey Lady that the firm had immediately halted shipments to the mainland as soon as it was made aware of the exports.
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