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Che Pan

Wency Chen

Mainland China’s chip design firms are anxiously waiting for any further updates from Taiwan Semiconductor Manufacturing Company (TSMC), after the world’s most advanced contract chip manufacturer paused 7-nanometre node services for some artificial intelligence (AI) chip clients in the world’s largest semiconductor market by consumption.
TSMC last week told graphics-processing-unit (GPU) and AI-accelerator clients on the mainland that their access to advanced processing services would be halted from Monday, the Post reported. Those restrictions were ordered by the US Commerce Department, according to a Reuters report citing an unnamed source.
Now questions have emerged in mainland China about whether TSMC would expand its shipment ban on advanced-node products to include central processing units (CPUs), autonomous-driving chips, high-end smartphone chips or other products in high demand in the country.
TSMC declined to comment on specifics on Monday, but said it would comply with applicable rules and regulations, including export controls.

The company tightened shipments to the mainland after Canadian integrated-circuit research firm TechInsights found a TSMC-made AI chip in a Huawei Technologies AI training card. The discovery suggested that US sanctions on the Shenzhen-based tech giant were compromised. TSMC denied any wrongdoing.
While TSMC’s current curbs apply only to advanced chips used in AI, the company is evaluating its “know-your-client” process, expanding product-review criteria, and considering additional restrictions, according to a research note from Taiwan-based TrendForce.
“TSMC is highly likely to implement these measures in the near term,” the consultancy said.
The full impact of TSMC’s latest move “will depend on whether the US Department of Commerce issues additional export control regulations or adds specific customers to the Entity List”, TrendForce said. Companies added to the Entity List, such as Huawei, are generally barred from doing business with US companies.
If TSMC’s ban were broadened to cover not only advanced AI chips but also those used in the smartphone and car industries, it could deal a heavy blow to mainland China’s thriving semiconductor design industry.
Some of the biggest Chinese tech companies have unveiled 7-nm or more sophisticated semiconductors. They include Baidu’s Kunlun AI chip, Alibaba Group Holding’s Yitian 710 general-purpose CPU, and electric vehicle (EV) maker Nio’s Shenji NX9031 autonomous-driving chip. Alibaba owns the Post.
Few Chinese companies have disclosed where their chips are processed, but there are virtually no contractors on the mainland capable of matching TSMC’s capacity in advanced nodes.
Mainland China accounted for 11 per cent of TSMC’s third-quarter revenue, according to data from Visible Alpha, an investment research unit of S&P Global Market Intelligence.

Some mainland businesses are already bracing for additional curbs from the Taiwanese company.
An executive at a mainland robotics start-up that uses TSMC services said the mood in the EV industry is gloomy because many players in the country have no alternative manufacturers to turn to should TSMC’s 7-nm services become unavailable. The person asked not to be named because of the sensitivity of the matter.
Semiconductor Manufacturing International Corporation (SMIC), China’s top foundry, is believed to have made advanced smartphone chips for Huawei, but its production capacity and quality are hindered by a lack of state-of-the-art tools, such as the extreme ultraviolet lithography systems from Dutch supplier ASML.
SMIC’s CEO Zhao Haijun said on Friday that US export restrictions have prevented the company from producing “competitive” GPU products. Meanwhile, China’s second-largest chip foundry Hua Hong Semiconductor is known to engage in only legacy chip production.
Efforts by SMIC and Hua Hong to expand manufacturing capacity “may not come fast enough to address demand for high-end power chips used in data centres”, said Phelix Lee, analyst at investment research firm Morningstar.
Additional reporting by Xinmei Shen


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A wider shipment ban on TSMC-made chips could affect a range of mainland businesses from electric vehicles to smartphones


A wider shipment ban on TSMC-made chips could affect a range of mainland businesses from electric vehicles to smartphones.


China’s tech firms fear bigger curbs as TSMC stops AI chip supply on US order

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}A wider shipment ban on TSMC-made chips could affect a range of mainland businesses from electric vehicles to smartphones

A wider shipment ban on TSMC-made chips could affect a range of mainland businesses from electric vehicles to smartphones