The U.S. is concerned that if China is able to obtain AI chips, they could be used to improve the country’s military capabilities. Earlier this month the U.S. fined GlobalFoundries $500,000 for shipping chips without authority to China’s largest foundry (and the third largest in the world after TSMC and Samsung Foundry) SMIC.
“TSMC does not comment on market rumour. TSMC is a law-abiding company and we are committed to complying with all applicable rules and regulations, including applicable export controls.”-TSMC spokesman
Today’s report says that TSMC’s decision to suspend the AI chip shipments to China will have a negative impact on Chinese tech firms including Alibaba and Baidu. Those two firms have spent plenty of cash designing chips for their AI clouds and were hoping to have them manufactured by TSMC. There has been speculation from securities firm Jefferies that the Commerce Department will soon announce a new export rule that will ban foundries from building advanced AI chips designed by Chinese firms.
The U.S. fined GlobalFoundries $500K earlier this month for shipping chips to Chinese foundry SMIC. | Image credit-SMIC
As for TSMC, the decision to suspend the production of advanced AI chips for Chinese clients is a sign that the foundry knows it is on the hot seat and needs to improve its internal controls. The next batch of U.S. export controls on chips to China could be announced by the U.S. before President Joe Biden leaves the White House in January.
“Taiwan took our chip business from us. I mean, how stupid are we? They took all of our chip business. They’re immensely wealthy.”-President-Elect Donald Trump
TSMC says that the suspension of Chinese AI-chip production is “not a show for Trump but definitely designed to underscore that we are the good guys and not acting against US interests.”
