The US Department of Commerce has ordered the Taiwanese chip manufacturer TSMC to stop supplying advanced chips to Chinese customers.
The US Department of Commerce has directed Taiwan's chip manufacturer TSMC to stop shipping advanced chips to Chinese customers with immediate effect, according to Reuters. The order specifically targets semiconductors with 7-nanometer structures or more advanced designs that could be used in AI applications and graphics processors (GPUs).
The directive, which took effect Monday, follows an incident where TSMC chips were found in a Huawei AI processor. Research firm Tech Insights discovered the TSMC component while analyzing Huawei hardware. TSMC had already halted the shipment of these chips.
TSMC notifies Chinese customers about supply halt
Following the US order, TSMC has informed affected Chinese customers about the supply stoppage. Chinese media portal Ijiwei reports that TSMC has specifically notified Chinese chip design companies that starting November 11, it will stop supplying 7-nanometer chips or more advanced chips for AI and GPU applications.
Among those affected is chip designer Sophgo, which was already facing restrictions after its chip matched the one found in the Huawei Ascend 910B AI processor.
AI chip trade in China continues despite export bans
This strict measure is part of a broader US strategy to control Chinese access to advanced semiconductor technology. The US introduced export restrictions on advanced AI chips in September 2022 to prevent countries like China, Russia, and Iran from accessing technologies that could enable military applications. These regulations have been adjusted multiple times since their introduction to account for new technical developments. US chip manufacturers are also prohibited from building new chip factories in China.
Despite these export bans, the AI chip trade continues to thrive. Reports indicate that numerous vendors in Shenzhen are conducting deals worth over $100 million, and Chinese government organizations, including military facilities, have access to the prohibited chips. Recently, it was also revealed that an Indian pharmaceutical company sold high-performance servers with Nvidia chips worth over $300 million to Russia.
The Biden administration is currently working on updating rules for technology exports to China, and plans to add approximately 120 Chinese companies to the Commerce Department's restricted entity list.
