TSMC Stops Advanced Chip Shipments to Chinese Customers

Taiwan Semiconductor Manufacturing Company, the maker of most of the world’s cutting-edge computer chips, discovered last month that one of its chips had ended up precisely where policymakers in the United States did not want it: in a processor made by Huawei.

It is not clear exactly how the chip was routed to Huawei, a Chinese telecommunications firm under U.S. sanctions, but a TSMC customer from China had placed orders with TSMC for a processor with the same design and specifications.

Now, TSMC will stop sending its most advanced chips to China while it reviews orders to make sure they comply with U.S. regulations, according to two people familiar with the matter who were not authorized to speak publicly.

The world’s biggest tech companies contract with TSMC to manufacture semiconductors, the tiny pieces of silicon with billions of circuits etched onto their surface that power everything from iPhones to electric cars. TSMC works from specifications designed by its customers, who then sell to their own clients.

The U.S. government has tried for years to keep the most advanced chips, which are essential for artificial intelligence systems, out of the hands of Chinese companies over concerns they could be used for military purposes.

It has blocked American companies like Nvidia from selling powerful A.I. chips in China and urged Japanese and Dutch firms to stop selling to China the specialized machines used to manufacture the chips.