Taiwan Semiconductor to halt making advanced AI chips for China next week: report

Taiwan Semiconductor (NYSE:TSM) will no longer build advanced artificial intelligence processors for Chinese companies as of next week, amid the push from the U.S. to impede China’s ambitions, the Financial Times reported.

The halt will impact process nodes that are 7 nanometers in size or smaller and start on Monday, the news outlet added, citing three people familiar with the matter. Two of those people added that if Taiwan Semiconductor were to create processors for Chinese companies, an approval process would likely have to come from Washington.

The move to cut Chinese companies off was done in part by a need to improve internal controls and getting ahead of the next wave of export controls from the U.S., the news outlet added, citing a source. “We want to start mitigating before there are solid, structured regulations,” one of the people explained.

The move could impact companies such as Baidu (BIDU), Alibaba (BABA) and others who have used Taiwan Semiconductor for their manufacturing purposes. Baidu founder Robin Li spoke of Taiwan Semi’s Kunlun processors last year and said they are “especially well-suited for large model inference and will eventually be suitable for training.”

Taiwan Semiconductor, Alibaba and Baidu did not immediately respond to a request for comment from Seeking Alpha.

Late last month, Taiwan Semiconductor reportedly halted shipments to Chinese chip designer Sophgo after one of its chips ended up in an AI processor by Huawei. Sophgo said in a statement on its website that the investigation by the U.S. Commerce Department is not related to Sophgo and that it has never been engaged in a business relationship with Huawei.

Taiwan Semiconductor reported October revenue on Friday and said that revenue for the month rose 29.2% year-over-year to roughly $9.8B.