Taiwan Semiconductor Manufacturing Co. (TSMC) has reportedly informed its Chinese clients that it will halt the production of its most advanced AI chips, according to multiple sources. The move comes as part of a broader US effort to limit China’s access to cutting-edge technology. However, sources told the Financial Times (FT) that the decision is not expected to significantly impact TSMC’s revenue.
Starting this week, TSMC will no longer manufacture AI chips built on advanced process nodes of 7 nanometers or smaller for Chinese companies, including major players like Alibaba and Baidu, which have been working to develop domestic alternatives to Nvidia, the world’s leading AI chipmaker. Any future chip shipments to Chinese firms will require approval, which will likely involve the US government, sources confirmed.
As the world’s largest independent semiconductor foundry, TSMC is a key player in global chip manufacturing. Despite the decision, TSMC’s revenue is not expected to take a major hit, as the company remains one of the most influential tech firms globally.
The move follows increasing pressure from the US, which is expected to announce further export controls targeting China’s access to advanced semiconductor technology in the coming months. One person familiar with the matter told FT that TSMC wanted to take proactive steps before more formal regulations are imposed.
TSMC, along with other chipmakers, is already prohibited from supplying certain Chinese tech companies without approval from the US government. These restrictions are part of US sanctions and export control measures aimed at limiting China’s access to technologies that could have national security implications.
TSMC’s supply chain came under scrutiny earlier this year when reports revealed that its chips were found in products made by Huawei, a Chinese telecom giant subject to US sanctions. The US Commerce Department is currently investigating the situation, and sources suggest that the company’s decision to halt sales to Chinese firms is partly a response to tighten its internal compliance processes.
The decision may also play a role in maintaining favorable relations with the US government, particularly as tensions rise ahead of the upcoming US presidential election. President-elect Donald Trump has previously criticized Taiwan’s semiconductor sector, accusing the island of taking away US chip business and suggesting that TSMC could move production to the US in exchange for subsidies.
In a statement, TSMC confirmed that it is “a law-abiding company” committed to complying with all export controls but declined to comment specifically on the reports of the new restrictions. The company’s stance underscores its efforts to align with US interests while navigating the complexities of the global tech landscape.
The news was first reported by the Chinese tech site Ijiwei.
