07:15 AM EST, 11/08/2024 (MT Newswires) -- Taiwan Semiconductor Manufacturing ( TSM ) has informed Chinese chip designers that it will halt production of their advanced AI chips, specifically those manufactured at 7-nanometer nodes or smaller, starting Monday, Financial Times reported Friday, citing unnamed people familiar with the matter.

TSMC has also cautioned that any future orders of these advanced chips from Chinese clients will require approval, likely involving oversight from the US government, according to the report.

This decision could impact the ambitions of major Chinese tech companies like Alibaba and Baidu, as well as smaller start-ups that rely on TSMC's manufacturing capabilities, the report said.

TSMC's move comes amid scrutiny from the US Commerce Department regarding TSMC's advanced chips found in devices from Huawei, a company under US sanctions.

One of the sources said TSMC aims to "start mitigating before there are solid, structured regulations" and is particularly concerned about being perceived as "unreliable or uncooperative" by the US government, according to the report.

"TSMC does not comment on market rumor," the company told MT Newswires in an email. "TSMC is a law-abiding company and we are committed to complying with all applicable rules and regulations, including applicable export controls," the company said.

(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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