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The Taiwan Semiconductor Manufacturing Company has informed Chinese chip design firms that it’ll halt production of its most advanced artificial intelligence chips as Washington continues to stymie Beijing's AI ambitions.
Three people accustomed to the matter said that TSMC, the world's largest contract chipmaker, has told its Chinese customers that it’ll not produce AI chips in advanced process nodes of seven nanometers or smaller starting next Monday.
Two of the people said future shipments of such semiconductors by TSMC to Chinese customers can be subject to an approval process that will likely involve Washington.
TSMC's stricter rules could curb the ambitions of Chinese tech giants like Alibaba and Baidu, which have invested heavily in developing semiconductors for his or her AI clouds, in addition to a growing variety of AI chip design start-ups which have turned to the Taiwanese group have, nullify manufacturing.
The US has banned American firms like Nvidia from supplying advanced processors to China and has also created a comprehensive export control system to stop global chipmakers that use US technology from supplying advanced AI processors to China. There have been reports that a brand new U.S. rule would ban foundries from making advanced AI chips developed by Chinese firms, in keeping with analysts at investment bank Jefferies.
TSMC is rolling out its recent policy because the U.S. Commerce Department investigates how cutting-edge chips it made for a Chinese customer ended up in a Huawei AI device. The Chinese national tech champion is subject to several US sanctions and export controls.
People accustomed to TSMC's move said its decision was as a result of a “combination” of the necessity to improve internal controls amid this ongoing investigation and the following wave of U.S. export controls on chip shipments to China , which is anticipated before US President Joe Biden leaves office.
“We want to start out containment before there are solid, structured regulations,” said one respondent.
The company is believed to be particularly wary of being targeted as unreliable or uncooperative as Donald Trump is about to grow to be the following US president.
This 12 months, Trump accused Taiwan of “stealing” the US chip industry and suggested that TSMC could move its production home after receiving billions of dollars in subsidies from Washington to construct factories within the US.
An individual near TSMC said its move was “not a show for Trump, but definitely meant to underscore that we’re the nice guys and are usually not acting against US interests.”
The breakup with TSMC could hurt Chinese tech giants which were betting on making their most advanced AI chips in Taiwan. Search giant Baidu, particularly, is aiming to construct a comprehensive software and hardware suite to support its AI business.
At the guts of this effort is the Kunlun series of AI chips. Its Kunlun II processor is manufactured on the 7-nanometer level of miniaturization by TSMC, in keeping with Bernstein Research.
“Kunlun chips are actually particularly suitable for big model inference and can eventually be suitable for training,” Baidu founder Robin Li said at a conference last 12 months. Li added that the group has effectively reduced costs by developing its own chips.
The people briefed on the situation said TSMC's recent rules are clearly aimed toward AI processors, but it surely is to date unclear to what extent they shall be applied to other chips. China is home to a lot of leading startups developing AI chips for autonomous driving, including Hong Kong-listed Horizon Robotics and Black Sesame International Holding.
Executives and company materials from each groups have indicated that their latest generation of chips can be manufactured by TSMC on the 7-nanometer node.
The people near TSMC said the brand new restrictions wouldn’t have a significant impact on the corporate's revenue. TSMC's revenue rose 29.2 percent to NT$314 billion (US$9.8 billion) in October, marking a slight slowdown in growth in comparison with previous months.
In a press release, TSMC said it’s a “law-abiding company and we’re committed to complying with all applicable rules and regulations, including applicable export controls.”
The news was first reported by Chinese media site ijiwei.com.
