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EXCLUSIVE: US ORDERED TSMC TO HALT SHIPMENTS TO CHINA OF CHIPS USED IN AI
APPLICATIONS

By Karen Freifeld and Fanny Potkin
November 10, 20246:12 AM GMT+1Updated 4 days ago
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Item 1 of 2 A person visits TSMC Museum of Innovation in Hsinchu, Taiwan May 29,
2024. REUTERS/Ann Wang/File Photo
[1/2]A person visits TSMC Museum of Innovation in Hsinchu, Taiwan May 29, 2024.
REUTERS/Ann Wang/File Photo Purchase Licensing Rights, opens new tab

NEW YORK/SINGAPORE, Nov 9 (Reuters) - The U.S. ordered Taiwan Semiconductor
Manufacturing Co (2330.TW), opens new tab to halt shipments of advanced chips to
Chinese customers that are often used in artificial intelligence applications
starting Monday, according to a person familiar with the matter.
The Department of Commerce sent a letter to TSMC imposing export restrictions on
certain sophisticated chips, of 7 nanometer or more advanced designs, destined
for China that power AI accelerator and graphics processing units (GPU), the
person said.
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The U.S. order, which is being reported for the first time, comes just weeks
after TSMC notified the Commerce Department that one of its chips had been found
in a Huawei AI processor, as Reuters reported last month. Tech research firm
Tech Insights had taken apart the product, revealing the TSMC chip and apparent
violation of export controls.
Huawei, at the center of the U.S. action, is on a restricted trade list, which
requires suppliers to obtain licenses to ship any goods or technology to the
company. Any license that could aid Huawei's AI efforts would likely be denied.
Advertisement · Scroll to continue

TSMC suspended shipments to China-based chip designer Sophgo after its chip
matched the one found on the Huawei AI processor, sources told Reuters last
month.
Reuters could not determine how the chip ended up on Huawei's Ascend 910B,
released in 2022, viewed as the most advanced AI chip available from a Chinese
company.
The latest clampdown hits many more companies and will allow the U.S. to assess
whether other companies are diverting chips to Huawei for its AI processor.

As a result of the letter, TSMC notified affected clients that it was suspending
shipments of chips starting Monday, the person said.
The Commerce Department declined comment.
“TSMC has had regular discussions with the government on export control issues
and has made it clear that it will comply with domestic and international
regulations,” Taiwan's economy ministry said in a statement to Reuters,
referring specific questions to TSMC.

A spokesperson for TSMC also declined to comment beyond saying it was a
"law-abiding company...committed to complying with all applicable rules and
regulations, including applicable export controls."
The Commerce Department communication - known as an "is informed" letter -
allows the U.S. to bypass lengthy rule-writing processes to quickly impose new
licensing requirements on specific companies.
Ijiwei, a Chinese media site covering the semiconductor industry, reported on
Friday that TSMC notified Chinese chip design companies it would suspend 7
nanometer or below chips for AI and GPU customers beginning Nov. 11.

The action comes as both Republican and Democratic lawmakers have raised
concerns about the inadequacy of export controls on China and the Commerce
Department's enforcement of them.
In 2022, the Commerce Department sent is-informed letters to Nvidia and AMD
restricting their ability to export top AI-related chips to China, and to chip
equipment makers like Lam Research, Applied Materials and KLA to restrict tools
to make advanced chips to China.
The restrictions in those letters were later turned into rules that apply to
companies beyond them.
The U.S. has been delayed in updating rules on tech exports to China. As Reuters
reported in July, the Biden administration drafted new rules on some foreign
exports of chipmaking equipment and planned to add about 120 Chinese companies
to the Commerce Department's restricted entity list, including chipmaking
factories, toolmakers, and related companies.
But despite plans for an August release, and later tentative target dates for
publication, the rules still have not been issued.

The Technology Roundup newsletter brings the latest news and trends straight to
your inbox. Sign up here.

Reporting by Karen Freifeld and Fanny Potkin; Additional reporting by Ben
Blanchard in Taipei; editing by Chris Sanders and Chizu Nomiyama

Our Standards: The Thomson Reuters Trust Principles., opens new tab

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