• TSMC will stop supplying some of its most advanced AI chips to Chinese customers, according to reports.
• The United States has restricted China’s access to advanced technologies.
• The move is not expected to harm TSMC’s revenue, sources told the FT.

Taiwan Semiconductor Manufacturing Company has informed its Chinese customers that it will stop supplying them with its most advanced artificial intelligence chips, according to multiple reports.

Starting Monday, TSMC will no longer make AI chips on advanced process nodes of 7 nanometers or less for Chinese companies, three sources familiar with the matter said. flight.

TSMC has already supplied chips to tech giants like Alibaba and Baidu, which are leading China’s efforts to create a domestic alternative to America’s Nvidia, the world’s most valuable company.

Any future supplies to Chinese companies would be subject to an approval process that would likely include Washington, two of the people told the FT.

TSMC is Taiwan’s largest company and the world’s largest independent semiconductor foundry. The decision would not have a major impact on TSMC turnoverpeople said.

The move comes ahead of a new wave of export controls on chip supplies to China, expected to be introduced by the Biden administration in the coming months.

“We want to start mitigating before there are robust, structured regulations,” a person familiar with the matter told the FT.

TSMC and other chipmakers are already barred from doing business with certain Chinese technology companies without approval from the U.S. government. The policy is part of a number of sanctions and export controls aimed at restricting Chinese companies’ access to advanced technologies in the interest of national security.

TSMC’s supply chain was recently put under pressure after it was reported that the company’s chips were found in products produced by Huawei Technologies, whose exports are subject to American controls.

The US Commerce Department is investigating the incident and a source told the FT that Friday’s decision was influenced by the need to strengthen internal controls.

TSMC will also face a potentially difficult relationship with the next US president.

The success of Taiwan’s chip manufacturing sector is a sore point for President-elect Donald Trump. He accused the country of take the US chip business and suggested that TSMC repatriate production after benefiting from billions of dollars in subsidies from Washington to build manufacturing centers in the United States.

TSMC told Reuters on Friday that its U.S. investment plan “remains unchanged.”

The decision to stop supplying high-powered chips to Chinese customers was “not a show for Trump but was definitely meant to emphasize that we are the good guys and we are not acting against US interests,” said a source at the FT.

We are a “law-abiding company and we are committed
compliance with all applicable rules and regulations, including applicable export controls,” TSMC said in a statement to the FT.

TSMC did not immediately respond to Business Insider’s request for comment.

The news of TSMC suspending production was first reported by Chinese media site ijiwei.com.