A few years ago, the US government stopped the flow of advanced semiconductor chips to Chinese firms for geopolitical reasons. However, some advanced chips still made it to Huawei through illegal ways. To prevent that, the US plans to tighten its grip on the supply of advanced chips by asking Samsung and TSMC to follow due diligence.
US could ask Samsung and TSMC to stop flow of chips to blacklisted Chinese firms
The US plans to bring stricter regulations on semiconductor chip sales to blacklisted Chinese firms. During its final days, the Biden administration will reportedly ask chip firms like Intel, Samsung, and TSMC to scrutinize their customers more carefully. According to a Bloomberg report, the new rules could be unveiled this week.
Washington is reportedly keen on closing the backdoors through which some advanced chips are making their way to Chinese firms like Huawei. The solution is to cut off the supply at the source. That means more due diligence is to be done by Samsung and TSMC.
Samsung is already facing several issues in its semiconductor business, and stricter rules could mean fewer sales, as some chips that Chinese firms could buy will be restricted. It could affect sales of HBM3 memory chips that Samsung is supplying to Nvidia. Nvidia is using them in its AI accelerators sold in China.
What could be the new chip export rules set by the US government?
The new rules will reportedly restrict all chips manufactured using 14nm/16nm or better process nodes. Exporting them to China (or Chinese firms) or other restricted nations will require a government license. They will also help chip makers identify which chip designs are subject to restrictions.
Usually, the higher the number of transistors fitted into a single chip, the higher its processing power would be. Designing a smaller transistor allows chip makers to fit more transistors into the same area, thereby improving the processing capabilities of that chip. So, chips made on better process nodes (smaller transistor designs) are considered better.
Companies like Samsung and TSMC would be able to attest the chips that the US government does not restrict. Chips that reportedly have fewer than 30 billion transistors and are packaged by a trusted company wouldn't be considered advanced enough and could be supplied to Chinese firms.
The upcoming rules are made to target more sophisticated chips—AI accelerators—and stop them from reaching Chinese brands.
