TSMC’s 7nm chip ban targets China’s AI chipmakers – Asia Times

The largest chip contract manufacturer in the world, Taiwan Semiconductor Manufacturing Co ( TSMC), is rumored to stop providing semiconductors made of 7 nanometers or lower to Chinese companies that produce graphics processing units ( GPUs ).

The decision, successful from November 11 in line with US punishment, is aimed at blocking China’s Huawei Technologies from being able to spot purchases with TSMC via next events, island IT site Jiwei.com reported on November 8.

But, TSMC will still be able to offer Chinese companies that produce cards for use in smartphones and cars. &nbsp, &nbsp,

TSMC said it has no opinion on the information, saying only it is law-abiding and completely complies with all applicable laws and regulations, including appropriate trade control regulations.

Foreign fabless chip designers that use TSMC’s production companies to create AI/GPU chips&nbsp, include Alibaba’s T-Head, Baidu’s Kunlunxin, Iluvatar, Enflame, MetaX, Black Sesame International, Jaguar Micro, Nio, Xiaopeng and Horizon Robotics, according to TMTPost.com, a Taiwanese IT news site.

Three major Chinese AI chip makers, including Cambrian Technologies, Biden Intelligent Technology and Moore Threads Technology, had used TSMC’s foundry services until they were added to the US Commerce Department’s Bureau of Industry and Security’s ( BIS )” Entity List” in 2023.

But, it’s not clear whether these three Chinese companies have continued to order from TSMC through third parties in an effort to avoid the punishment. &nbsp, On November 8, the Shanghai-listed shares of Cambrian fell 9.5 % while the Shenzhen-listed shares of Horizon dropped 2.7 % after Jiwei.com published its report.

Semiconductor Manufacturing International Corp ( SMIC ), Dawning Information Industry Co ( Sugon ), and Naura Technology Group, three Chinese chipmakers, experienced rapid increases in shares at the same time. &nbsp,

In the third quarter, revenue from making 3nm, 5nm and 7nm chips accounted for 20 %, 32 % and 17 % of TSMC’s total revenue, respectively. In contrast to 12 % for the entire year of 2023, TSMC’s revenue from sales to China came in at about 11 % in the third quarter of this year. &nbsp,

Wafer destroyed

Jiwei.com’s statement came after TechInsights, a Canada-based data platform for the device business, said in a statement on October 9 that it found the Ascend 910B device on a Huawei Atlas 300T A2 AI training cards.

Midway through October, TSMC reported the incident to the US Commerce Department and reported the package of chips to Chinese fabless microprocessor manufacturer Xiamen Sophgo, a subsidiary of Bitmain, as a result. Huawei has not had a business partnership with Sophie or Bitmain. &nbsp,

It’s questionable whether the Chinese chipmakers involved in this tragedy may place more purchases with TSMC, despite Jiwei.com’s announcement on November 8 that all of the wafers involved have been destroyed. &nbsp,

Foreign chip designers now need to wait for the thorough delivery regulations, which are being discussed by TSMC and the US Commerce Department, before applying for certificates if they want to “tape out” or make their AI chips and GPUs using TSMC’s facilities, even though these items do not break US export regulations. ” Taping out” is a procedure that makes sample chips before mass production.

” I think it’s a good thing that TSMC will stop making 7nm and more advanced chips for Chinese customers”, Xiang Ligang, an IT expert with the Research and Development International, a think tank under the Chinese Academy of Social Sciences, says in a Weibo post.

Chinese companies are developing their GPUs and chip designs only in its early stages. It’s natural that they prefer to work with TSMC”, Xiang says. Their orders have been rejected by TSMC, which will then be taken over by Chinese chip foundries.

” Xiang Ligang seems to have underestimated the impact of TSMC’s latest decision”, a Guangdong-based columnist using the pseudonym” Xinyifei” says in an article. ” Given that the yield of China’s 7nm chip-making processes remains unknown, it is impossible that Chinese foundries can satisfy the demand of all local chip designers” .&nbsp,

According to the author, TSMC currently has the best 7nm and lower chips in the market, while Samsung in South Korea has a much lower yield. He claims that SMIC in China has limited production capacity and low yields, despite the country’s SMIC’s claim. &nbsp,

” In the short run, many Chinese fabless chip makers that make 7nm AI chips will have to shut down or downsize”, he opines.

More curbs ahead

Some analysts predicted that as soon as Donald Trump, widely viewed in the Chinese media as a” china hawk,” is elected, the Biden administration would tighten its and its allies ‘ chip export regulations.

Meanwhile, the coming debut of Huawei’s Mate70 smartphone may prompt the US Commerce Department to strengthen its chip export rules. Huawei may release the Mate70 on November 18 or 20, according to Chinese media.

They said the flagship product will use HiSilicon’s 7nm Kirin 9100 chip, which is said to match the performance level of Qualcomm’s Snapdragon 8 Gen 2 and 8 Gen 1 for computing processing unit ( CPU) and GPU, respectively.

But Huaweicentral.com said on November 9 that Huawei may use the previously launched Kirin 9010 chip in the Mate 70 as it has failed to secure enough Kirin 9100 chips.

US Commerce Secretary Gina Raimondo was surprised and dejected by the Huawei Mate60 smartphone’s launch during her China trip in August 2023. &nbsp, TechInsights later found that the Kirin 9000s chip inside the Mate60 was made by SMIC with its 7nm ( N 2 ) process. &nbsp,