China's Tech Industry on Edge as TSMC Halts AI Chip Supply Following US Order
TSMC halts AI chip supply to Chinese clients following US orders, raising concerns in China's tech industry. Speculation arises about potential expansion of TSMC's ban to include CPUs, smartphone chips, and autonomous-driving chips. Chinese tech giants like Baidu, Alibaba, and Nio could face challenges if TSMC's restrictions extend beyond AI chips.
TSMC recently informed GPU and AI-accelerator clients in China that their access to advanced processing services would be suspended, following orders from the US Commerce Department. Speculation is rife in China about the possibility of TSMC extending the ban to include CPUs, autonomous-driving chips, and high-end smartphone chips.
TSMC has refrained from providing specific details but stated its commitment to complying with export controls. The company's decision to restrict shipments to China came after a TSMC-made AI chip was discovered in a Huawei AI training card, raising concerns about potential violations of US sanctions against the tech giant.
Although TSMC's current restrictions are limited to advanced AI chips, the company is reportedly reviewing its client verification process, expanding product-review criteria, and contemplating additional restrictions, according to a research note from TrendForce, a Taiwan-based consultancy.
The full impact of TSMC's actions hinges on potential additional export control regulations from the US Department of Commerce or the inclusion of specific customers on the Entity List, which prohibits business dealings with US companies. If TSMC broadens its ban to encompass chips used in smartphones and automobiles, it could significantly impact China's semiconductor design industry.
Several major Chinese tech companies have introduced sophisticated semiconductors, including Baidu's Kunlun AI chip, Alibaba Group Holding's Yitian 710 general-purpose CPU, and Nio's Shenji NX9031 autonomous-driving chip. However, the lack of domestic contractors capable of matching TSMC's advanced node capacity poses a challenge for China's semiconductor sector.
Mainland China contributed 11% of TSMC's third-quarter revenue, highlighting the country's significant role in the company's operations. With concerns mounting over potential further restrictions from TSMC, businesses in China are bracing for the impact on their operations and supply chains.
The uncertainty surrounding TSMC's supply chain decisions has cast a shadow over industries like electric vehicles and robotics in China, where alternative manufacturers are scarce. Semiconductor Manufacturing International Corporation (SMIC), China's leading foundry, faces obstacles in producing competitive GPU products due to US export restrictions, while Hua Hong Semiconductor focuses primarily on legacy chip production.
TSMC halts AI chip supply to Chinese clients following US orders, raising concerns in China's tech industry.
Speculation arises about potential expansion of TSMC's ban to include CPUs, smartphone chips, and autonomous-driving chips.
Chinese tech giants like Baidu, Alibaba, and Nio could face challenges if TSMC's restrictions extend beyond AI chips.
Source: SCMP