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China Worried That The US Will Block TSMC Chip Supply For Its Industry. Country Prepares For Impact On Car And Cell Phone Production. See Details
TSMC, the world’s largest semiconductor manufacturer, is aligned with the US government. The Taiwanese company has committed to the American administration to follow export control rules. Since the US imposed broader sanctions on the Chinese chip industry in October 2022, TSMC has been closely collaborating with the US Department of Commerce.
End of AI Chip Production For Chinese
Even with the current delicate scenario, TSMC still has clients in China. Until a few days ago, the company was still manufacturing chips for artificial intelligence applications for some of these clients.
However, with the commitment made to the United States, TSMC has informed that it will stop manufacturing AI chips or high-performance computing processors for Chinese companies.
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Despite this, the company continues to supply other types of semiconductors to the Chinese market. Among these are the chips used in electric vehicles and smartphones. However, this production may be coming to an end.
Fear of New US Sanctions
According to the South China Morning Post (SCMP), Chinese companies believe that the United States is preparing a new package of sanctions. There is concern that these possible measures could further harm the technology and electric vehicle sectors in China.
Currently, TSMC no longer manufactures artificial intelligence chips in its 7-nanometer nodes or more advanced technologies for various Chinese clients. The expectation is that new sanctions will expand this prohibition to other types of chips.
Chinese companies fear that TSMC will also stop producing general-purpose processors, chips used in autonomous driving, integrated circuits for high-end cell phones, and other important semiconductors for the local industry. This fear is fueled by the current climate of tension between the United States and China.
Limitations of The Chinese Industry
If this scenario materializes, the Chinese technology and electric vehicle industry could face a significant impact. The dependence on TSMC, which has cutting-edge technology, is considerable.
At the moment, no semiconductor manufacturer in China has large-scale production of chips with the same technology as TSMC.
SMIC, the leading Chinese manufacturer, has the capacity to produce 7-nanometer chips and possibly 5-nanometer chips. However, it uses a technique called multiple patterning, which significantly increases the cost of the process. This makes large-volume production unfeasible.
Thus, if the United States does impose new sanctions and TSMC further reduces its presence in the Chinese market, companies in the Asian country could be left without adequate supply of advanced chips.
The Taiwanese consultancy TrendForce, considered reliable by industry observers, believes that new prohibitions are about to happen.
With information from Xataka.
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