TSMC is suspending production of chips for Chinese semiconductor design firms from today.
According to a report from the FT, the Taiwanese chipmaker will stop making AI chips using its advanced process nodes of 7nm or smaller for Chinese customers.
The decision was made after it was revealed that the US government had opened an investigation after receiving notification from TSMC that a customer had placed an order with the company for a chip that resembled Huawei’s Ascend 910B.
TSMC previously produced the chip’s predecessor for Huawei but has not worked with the company since US sanctions came into force in 2020. It has been noted that there is no suggestion TSMC wilfully or maliciously violated US sanctions.
Citing people familiar with the matter, the FT further reported that the decision was made by TSMC partly through the need to improve its internal controls but also to get ahead of any additional export controls President Biden could enact before leaving office.
The report also claimed that the company was wary of being targeted by Trump’s incoming administration, particularly given his disparaging comments about the Taiwanese chip industry.
Speaking during an interview with Joe Rogan before the 2024 election, Trump said: "You know, Taiwan, they stole our chip business, okay?”
He added: “They want us to protect, and they want protection. They don't pay us money for the protection, you know. The mob makes you pay money, right? But with these countries that we protect, I got hundreds of billions of dollars from NATO countries that were never paying us."
Trump made similar comments back in July, saying that payment would be like protection money.
TSMC 2nm chips will not be produced in Arizona ahead of schedule
It was also confirmed this week that Taiwan’s technology protection rules currently prohibit TSMC from producing 2nm chips abroad, meaning the company would not be able to start producing 2nm chips at its Arizona fab any earlier than previously announced.
In comments reported by the Taipei Times, Minister of Economic Affairs J.W. Kuo said: “Since Taiwan has related regulations to protect its own technologies, TSMC cannot produce 2nm chips overseas currently.”
The law states that Taiwanese chip makers can only produce chips abroad that are at least one generation less advanced than the chips being produced in their domestic fabs. This means that TSMC would be able to produce 2nm chips abroad in the future but not until its next generation A-16 chips enter volume production in Taiwan, something which is expected for the latter half of 2026.
Production of 2nm chips at the company’s Arizona fab is currently slated for 2028.
