In the United States’ latest export restriction measures, the world’s largest contract chipmaker, TSMC, has taken extremely cautious steps to ensure compliance, with the impact on the Chinese chip industry exceeding industry expectations.
According to sources cited by Nikkei Asia on Saturday, TSMC has informed its Chinese customers that any orders utilizing its 16-nanometer or more advanced production technology must use suppliers approved on the U.S. “white list” for packaging services, or else TSMC will not be able to ship the orders.
This requirement applies to all types of chips, whether they are used for artificial intelligence or other purposes.
Packaging is a crucial step in the chip manufacturing process, where multiple chips are integrated into a module after wafer fabrication. Advanced packaging technology can enhance computational performance.
Initially, many industry insiders believed that the U.S. new regulations primarily targeted artificial intelligence chips with more than 30 billion transistors on a single chip.
Sources revealed that after consulting with legal advisors and the U.S. Department of Commerce, TSMC decided that even if the packaging supplier chosen by customers is on the “white list,” if the packaging factory is located in China, TSMC still will not ship to these customers.
This significant restriction indicates that the location of chip packaging is a critical factor. Currently, there are about twenty-plus chip packaging companies on the white list, and none of them are Chinese suppliers approved.
A source familiar with the situation mentioned that if Chinese customers switch to approved packaging suppliers or obtain direct approval from the U.S., TSMC is still willing to supply them.
TSMC’s cautious approach will have a significant impact on Chinese chip developers, affecting various sectors from mobile phones and industrial applications to autonomous driving.
A semiconductor developer executive directly involved in the situation told Nikkei, “If Chinese chip developers still need TSMC’s production services, many companies will need to immediately change chip packaging suppliers or quickly negotiate with suppliers on the white list to move production to overseas factories.”
“The impact on Chinese chip developers and the supply chain is much greater than expected, as initially, people thought this would only restrict chips related to artificial intelligence,” he added.
In the final days before leaving office, the Biden administration issued strict rules for major global chip manufacturers and top chip packaging suppliers, limiting their ability to provide services to Chinese customers.
TSMC (Taiwan), Samsung (South Korea), GlobalFoundries (U.S.), and UMC (Taiwan) are some of the world’s major chip manufacturers.
Sources told Nikkei that TSMC also requires Chinese chip developers who may be affected by the new Washington regulations to fill out detailed forms to verify that their transistor count does not trigger U.S. regulatory thresholds.
Due to the U.S.’ long-standing restrictions on advanced chip manufacturing equipment from being acquired by China for its manufacturing, Beijing has viewed packaging as a way to narrow the technological gap with the West. Beijing has accelerated the development of a robust chip packaging industry, currently possessing companies like JCET and Tsinghua Unigroup, the major supplier for U.S. chip developer AMD.
TSMC stated that this action is to comply with all applicable laws and regulations, as well as to fully adhere to the new export control rules.