In Line with U.S. Control of Chip Technologies to China

TSMC has suspended contract production of high-tech semiconductors for some Chinese customers.

Taiwan’s TSMC, the world’s No. 1 foundry player, has halted contract production of high-tech semiconductors for some Chinese customers. The decision followed the U.S. government’s recent move to strengthen control of U.S. chip production equipment exports to China. External pressure is also expected to increase on Samsung Electronics and SK Hynix to participate in export restrictions on China.

TSMC has decided to stop contract production for Biren Technology, a Chinese artificial intelligence (AI) semiconductor startup. Biren’s GPU is known to perform better than Nvidia's A100. TSMC took a preemptive action even though it has not been decided whether Biren's products are subject to U.S. sanctions.

Earlier this month, the U.S. Department of Commerce virtually banned U.S. companies from exporting 18-nm or more advanced DRAMs, 128-layer or more advanced NAND flashes and 14-nm or more advanced system semiconductors to China. According to the guideline, U.S. companies have to obtain separate approval from the U.S. Department of Commerce to trade with Chinese semiconductor companies. 

TSMC's move fueled concerns over Samsung Electronics and SK Hynix, which rely on China for a significant share of their sales.

In particular, Samsung Electronics has a number of Chinese companies as its foundry customers. The first customer of Samsung Electronics’ 3-nm process, which started to roll out chips in the first half of this year, is Chinese fabless company Pansemi that designs application specific integrated circuits (ASICs) for bitcoin mining. Samsung Electronics’ Foundry Division reportedly relies more heavily on China than TSMC for sales.

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