TSMC is rumored to now restrict placing orders below 16nm from Chinese IC design companies, signaling that the Taiwan giant will be more careful with China now.
TSMC Will Only Place Orders With China's Chip Companies If They Package Semiconductor From
Well, it seems like TSMC is looking to be more cautious in dealing with China amid the backlash it received when it was previously reported that TSMC's chips ended up in Huawei's AI processors. In a report by Taiwan Economic Daily, it is now being claimed that the Taiwan giant has told Chinese IC manufacturers that it will suspend shipments below 16nm, given that they don't comply with a set of regulations that we'll discuss ahead. TSMC's cautious approach is likely to be an influence of the Trump administration and the growing "chip war" between the US and China.
The report says that TSMC won't place orders for 16nm products if they are not packaged by a BIS-complaint OSAT (Outsourced Semiconductor Assembly and Test) firm. The rule is said to have been in effect since 31st January, and in light of this, many Chinese IC design companies have shifted their packaging orders to the companies approved by BIS to maintain the flow of orders to TSMC. It is said that 16nm orders at TSMC account for less than 10% of the foundry's revenue, so it is unlikely that this move will affect the Taiwan giant's financial performance.
It is claimed that the BIS whitelist procedure is implemented to ensure transparency within China's semiconductor industry, considering that the nation holds superiority regarding volume production of mature nodes, such as 16nm or 18nm. Interestingly, many of China's 16nm/18nm customers are American or European automotive manufacturers, and as stated by ASML's CEO previously, the world needs semiconductors from China to sustain the supply-demand of the markets.
It will be interesting to see how the Chinese semiconductor markets react to the new restriction, but given that many IC design companies have already started to adjust to the regulations, we won't see much of a reaction.
About the author: Muhammad Zuhair is a hardware and technology reporter for Wccftech, specializing in the semiconductor industry and the complex interplay between technology, manufacturing, and geopolitics. His coverage focuses on the corporate strategies and technological roadmaps of industry giants like TSMC, NVIDIA, Samsung, and Intel. Zuhair's expertise lies in deconstructing complex topics such as fabrication nodes (e.g., 2nm process), the economic impact of policies like the CHIPS Act, and the strategic development of AI infrastructure from NVIDIA, AMD and Intel.
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