(Reuters) -Taiwan Semiconductor Manufacturing Company ( TSM ) has notified Chinese chip design companies that it is suspending production of their advanced AI chips from Monday, Financial Times reported on Friday, citing three people familiar with the matter.

TSMC has told Chinese customers that it will no longer manufacture AI chips at advanced process nodes of seven nanometres or smaller, the report said.

Any future supplies of such semiconductors by TSMC to Chinese customers would be subject to an approval process which is likely to involve Washington, two of three people quoted said, according to the report.

"TSMC does not comment on market rumor. 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 in a comment.

The U.S. Department of Commerce did not immediately respond to a Reuters request for comment.

(Reporting by Rishi Kant in Bengaluru; Editing by Mrigank Dhaniwala)