The United States has ordered Taiwan Semiconductor Manufacturing Co. (TSMC) to halt shipments of advanced chips to Chinese clients, often used in artificial intelligence applications, beginning Monday, according to a source familiar with the matter.
The U.S. Department of Commerce issued a letter to TSMC, imposing export restrictions on advanced chips of 7 nanometers or more, which are critical for AI accelerators and graphics processing units (GPUs) intended for China, the source said.
This new directive, reported here for the first time, comes shortly after TSMC informed the Commerce Department that one of its chips was found in a Huawei AI processor, as Reuters reported last month. Analysis from tech research firm Tech Insights revealed that the TSMC chip was in a Huawei product, potentially violating U.S. export controls.
Huawei, a central figure in this U.S. action, is on a restricted trade list requiring suppliers to obtain licenses to ship technology or goods to the company. Licenses that could enhance Huawei’s AI capabilities would likely be denied.
Following this, TSMC halted shipments to China-based chip designer Sophgo, whose chip matched one found in the Huawei AI processor, sources told Reuters last month.
Reuters has not verified how the chip ended up in Huawei’s Ascend 910B, released in 2022, which is considered one of the most advanced AI chips available from a Chinese company.
This latest measure will affect multiple companies, giving the U.S. an opportunity to investigate whether other companies are redirecting chips to Huawei’s AI initiatives. As a result of the Commerce Department’s directive, TSMC informed affected clients that chip shipments would be suspended beginning Monday, the source confirmed.
The Commerce Department declined to comment.
“TSMC has had regular discussions with the government regarding export control issues and remains committed to complying with domestic and international regulations,” Taiwan’s economy ministry told Reuters, referring further inquiries to TSMC.
A TSMC spokesperson reiterated that it is a “law-abiding company… committed to complying with all applicable rules and regulations, including export controls.”
The Commerce Department’s communication, known as an “is informed” letter, allows the U.S. to expedite new licensing requirements for specific companies without a lengthy rule-making process.
Chinese semiconductor industry news site Ijiwei reported on Friday that TSMC had informed Chinese chip design firms of its decision to halt shipments of 7 nanometer or below chips for AI and GPU clients starting November 11.
This action follows bipartisan concerns in the U.S. about inadequate export controls on China and weak enforcement by the Commerce Department.
In 2022, the Commerce Department sent similar letters to Nvidia and AMD, limiting their exports of top AI chips to China, as well as to chip equipment firms like Lam Research, Applied Materials, and KLA to restrict advanced chip-making tools.
The restrictions in those letters were later codified into rules affecting companies beyond those initially targeted.
The U.S. has faced delays in updating tech export regulations for China. As Reuters reported in July, the Biden administration drafted new rules to limit foreign exports of chipmaking equipment and aimed to add about 120 Chinese companies, including chipmakers and equipment firms, to the Commerce Department’s restricted entity list.
Despite planning an August release and setting tentative deadlines for publication, these rules have yet to be implemented.
