US orders TSMC to halt shipments of advanced AI chips to China

The US government has ordered Taiwan Semiconductor Manufacturing Co to halt shipments of advanced chips to Chinese customers typically used in AI applications, media reports say.  

The US Department of Commerce sent a letter to TSMC imposing export restrictions on sophisticated chips, of 7 nanometer or more advanced designs, destined for China that power AI accelerator and graphics processing units (GPU), sources told Reuters.

TSMC has reportedly notified affected clients that it was suspending shipments of chips.  

Chinese technology companies like Baidu and Alibaba could potentially be impacted by Taiwan Semiconductor's decision, media reports say. 

The US order comes weeks after TSMC notified the Commerce Department that one of its chips had been found in a Huawei AI processor. 

Huawei is on a restricted trade list. Suppliers need to obtain licenses to ship any goods or technology to the company.  

TSMC suspended shipments to China-based chip designer Sophgo after its chip matched the one found on the Huawei AI processor, Reuters reported last month.

Sophgo claimed it has not done business with Huawei and that the Commerce Department's inquiry has no bearing on its activities.

“TSMC has had regular discussions with the government on export control issues and has made it clear that it will comply with domestic and international regulations,” Taiwan's economy ministry said in a statement to Reuters. 

A spokesperson for TSMC said it was a "law-abiding company...committed to complying with all applicable rules and regulations, including applicable export controls." 

The Commerce Department also recently imposed a USD 500,000 penalty on contract chipmaker GlobalFoundries for shipping chips without authorization to an affiliate of blacklisted Chinese firm SMIC.

The Commerce Department said GlobalFoundries sent 74 shipments worth USD 17.1 million to SMIC affiliate SJ Semiconductor without seeking a license. SMIC and SJ Semiconductor have been part of a trade restriction list since 2020.  

Exports to companies that are on the list require a special license that GlobalFoundries did not apply for.