TSMC Shares Tumble 3.55% Amid Rumors of AI Chip Production Halt for China
1min read Amid heightened speculation, TSMC (TSM) experienced a notable drop of 3.55% on November 11. The company remains under scrutiny following rumors that it would halt production of certain AI-related chips for Chinese clients. While TSMC has not confirmed these reports, it maintains compliance with all export control regulations, highlighting its adherence to both legal and regulatory requirements.
Reports indicate TSMC has informed Chinese AI chip customers of a planned suspension in supplying chips using 7nm and newer technologies. The restriction appears to focus specifically on AI and GPU-related products, excluding areas such as mobile phones and automotive sectors. This move is seen as a response to U.S. pressures, driven by dependencies TSMC has on U.S. technology and materials, which contribute significantly to its revenue.
The semiconductor industry is closely watching the development of the U.S. Chip and Science Act, which aims to support domestic manufacturing. TSMC has been negotiating substantial grants and loans to finance its expansion in the U.S., with its Arizona plant expected to begin production of 4nm chips next month. However, Taiwanese legal protections limit TSMC's capability to produce 2nm chips overseas.
For Chinese companies, this creates a significant challenge, potentially pushing them to seek alternative suppliers while encouraging accelerated domestic development to reduce reliance on foreign sources. Nevertheless, the immediate options for advanced AI chip fabrication remain limited, with Samsung Electronics and SMIC providing limited capacity.
The evolving U.S. restrictions and TSMC's position underscore the geopolitical tensions impacting the semiconductor supply chain. While specific details and timings of these restrictions remain uncertain, the potential impact on the global tech landscape is drawing increasing attention.
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