Exclusive-US has ordered TSMC to halt shipments to China of chips used in AI systems, the source said.
Written by Karen Freifeld and Fanny Potkin
NEW YORK/SINGAPORE (Reuters) – The United States has ordered Taiwan Semiconductor Manufacturing Co to halt shipments of advanced chips to Chinese customers that are often used in artificial intelligence systems from scratch. Monday (NASDAQ :), according to a person familiar with the matter.
The Commerce Department has sent a letter to TSMC imposing export restrictions on certain complex chips, 7 nanometers or more advanced designs, destined for China that power AI accelerators and graphics processing units (GPU), the person said.
The US order, which is being reported for the first time, comes weeks after TSMC notified the Commerce Department that one of its chips was found in a Huawei AI processor, as Reuters reported last month. Technology research firm Tech Insights had dissected the product, revealing TSMC’s chip and an apparent violation of export controls.
Huawei, which is at the center of the US action, is on the restricted trade list, which requires suppliers to obtain licenses to export any goods or technology to the company. Any license that would help Huawei’s AI efforts is likely to be rejected.
TSMC halted shipments to Chinese chip designer Sophgo after its chip was found to be similar to the one found in a Huawei AI processor, sources told Reuters last month.
Reuters could not determine how the chip ended up in Huawei’s Ascend 910B, released in 2022, which is considered the most advanced AI chip available from the Chinese company.
The latest clampdown is hitting many companies and will allow the US to check whether other companies transfer chips to Huawei for its AI processor.
As a result of the letter, TSMC notified affected customers that it would stop shipping chips starting Monday, the person said.
The Commerce Department declined to comment.
A TSMC spokesperson also declined to comment beyond saying it is “a law-abiding company…committed to complying with all applicable laws and regulations, including applicable export controls.”
The Commerce Department’s communication — known as a “notice” — allows the US to skip lengthy rulemaking processes to quickly impose new licensing requirements on certain companies.
Ijiwei, a Chinese news site that covers the semiconductor industry, reported on Friday that TSMC has informed Chinese chip design companies that it will stop 7 nanometer or less chips for AI and GPU customers from November 11.
The move comes as both Republican and Democratic lawmakers have expressed concern about China’s inadequate export controls and Commerce Department enforcement.
In 2022, the Commerce Department sent notices to Nvidia (NASDAQ: ) and AMD (NASDAQ: ) limiting their ability to export AI-related chips to China, as well as to chip makers such as Lam Research (NASDAQ :), Used. Materials (NASDAQ: ) and KLA to limit equipment for making advanced chips to China.
The restrictions in those books were then turned into laws that apply to companies beyond them.
The US has delayed revising its tech export rules to China. As Reuters reported in July, the Biden administration is drafting new rules on some exports of chip-making equipment and plans to add about 120 Chinese companies to the Commerce Department’s list of restricted companies, including chipmaking factories, toolmakers, and related companies.
But despite plans for an August release, and later target publication dates, the rules still haven’t been released.
