08:07 AM EDT, 06/05/2024 (MT Newswires) -- Chinese AI chip companies, facing US sanctions, are designing less powerful processors to maintain access to Taiwan Semiconductor Manufacturing ( TSM ) , Reuters reported on Wednesday, citing people with knowledge of the matter.

The recent US export restrictions on highly sophisticated processors from companies such as Nvidia and chip manufacturing equipment have exposed China's production dependency on TSMC for advanced chip production, the report said.

MetaX and Enflame have submitted downgraded chip designs to TSMC late last year, with MetaX developing a downgraded GPU called the C280 after running out of its advanced C500 GPU, the report said.

China has about 44 foundries, but only Semiconductor Manufacturing International can produce highly advanced GPUs in large volumes, Reuters reported. SMIC has recently agreed to allocate some capacity to sanctioned Chinese AI chip firms like Cambricon, which has struggled under US restrictions since late 2022, the report added.

MetaX and Cambricon did not respond to MT Newswires' request for comment. Meanwhile, Enflame could not immediately be reached for comment.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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