US cracks down on TSMC advanced chip shipments to China

“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,” reports Reuters. While this latest escalation in America’s chip war with China is unsurprising, it’s worth taking a step back to fully appreciate what has happened. The US is directly telling a foreign company who it can and can’t do business with. Imagine how the US would respond if the roles were reversed.

It seems the first reporting on this matter was done by Chinese site Jiwei.com. The automatic translation of the story reports that TSMC had sent notification to its Chinese AI chip customers, saying it will suspend the shipments of all chips made on the 7nm process as well as any made using even more advanced tech. Apparently this followed the visit of a US representative to Taiwan. The FT also has its own sources alleging the same.

It seems fair to assume this move is a direct consequence of a TSMC-made part having apparently been found in a new Huawei AI accelerator. That assumption is shared by Taiwan-based TrendForce, which notes how dependent TSMC is on US companies for its business. Nonetheless, Chinese state-controlled media outlet Global Times insists TSMC can’t afford to lose the Chinese market.

The US has been breathing down TSMC’s neck for years, although previously it limited its demands to banning the supply of chips to Huawei. This move marks yet another increment of mission-creep in US policy, which is clearly now designed to suppress Chinese technological development in general. There seems to be no limit to the amount of collateral damage the US is prepared to tolerate in the prosecution of this aim and it will be interesting to see whether this strategy becomes a bit less unilateral and a bit more transactional under the next US government.