Recently, a revelation about Taiwan Semiconductor Manufacturing Company (TSMC) detonated the discussion of the whole industry. It was revealed that from November 11, 2024, TSMC will suspend the supply of chips with 7nm and more advanced processes to Chinese mainland at the request of the US Department of Commerce, and at present, TSMC has notified affected customers. The decision not only caused an uproar in the industry, but was also seen as a continuation of the Trump administration's tech war against China. In this context, the semiconductor industry in Chinese mainland is facing unprecedented challenges, and at the same time, it has also ushered in opportunities for transformation and upgrading.
First, the direct impact of the technological blockade
TSMC's 7nm process technology is a global leader, and its products are widely used in AI, GPU, server chips and other fields. For example, Intel's Ponte Vecchio GPU, which integrates more than 100 billion transistors and uses a 7nm process, demonstrates the application of the 7nm process in the field of high-performance computing. TSMC's decision means that AI chip companies in Chinese mainland will face a readjustment of the supply chain. These companies may need to find new chip suppliers, or adjust their product plans and technical roadmaps to adapt to this change.
Picture: Trump Turn White House Again and TSMC 7nm chip supply outage, how to deal with Chinese mainland?
Second, the response strategy of the market and enterprises
The market reacted quickly to TSMC's decision. The stock prices of the affected companies fluctuated, such as Cambrian and Horizon Robotics, respectively. This reflects concerns about the stability of the supply chain and uncertainty about future technological developments. For AI chip companies in Chinese mainland, this decision is undoubtedly a huge challenge. They need to find alternatives in a short period of time to guarantee the competitiveness of their products and market supply. At the same time, this also brings development opportunities for domestic chip design and manufacturing enterprises, prompting them to accelerate technology research and development and capacity expansion.
3. Political factors and global supply chains
Behind TSMC's decision is the continuous intensification of U.S. technology sanctions and export controls on China. The U.S. Department of Commerce has sent a letter to TSMC asking it to stop supplying AI chips with 7nm and more advanced process technology to customers in Chinese mainland starting November 11. The intervention of this political factor has challenged the stability of the global semiconductor supply chain as never before. Against this backdrop, TSMC needs to balance the needs of its global customers with its own business interests while complying with export control regulations. The decision also reflects TSMC's delicate position in the global semiconductor industry and the fierceness of technology competition between China and the United States.
4. the transformation and upgrading of the semiconductor industry in the mainland
In the face of technological blockade, the semiconductor industry in Chinese mainland needs to increase independent research and development efforts and strive to make breakthroughs in core technologies. The development of high-end process chips is extremely difficult, involving very subtle transistor layout, nanometer process control, and precise coordination of materials science. Chinese companies should invest enough resources in 7nm, 5nm and even 3nm technology to narrow the gap with leading international companies such as TSMC and Samsung, and strive to achieve technological catch-up within a certain period of time. At the same time, enterprises need to further integrate resources to improve R&D collaboration in all aspects of chip design, material R&D and wafer manufacturing, and create a complete technology chain.
5. Conclusions and prospects
In the view of the editor of China's overseas semiconductor network, TSMC's decision to suspend the supply of 7nm chips to Chinese mainland is the result of the intertwining of technical, market and political factors. This incident not only has a far-reaching impact on AI chip companies in Chinese mainland, but also poses a challenge to the stability of the global semiconductor supply chain. In the future, chip companies in Chinese mainland need to accelerate technological innovation and capacity expansion to cope with increasingly fierce international competition. At the same time, the global semiconductor industry also needs to find a more stable and sustainable development model to ensure the continuous progress of technology and the healthy development of the market. In this process, Chinese mainland's semiconductor industry is expected to gradually reduce its dependence on external technologies and enhance its competitiveness and market position by increasing R&D investment, promoting industrial upgrading, building a diversified innovation ecosystem, and expanding alternative supply chains.
In this process, AI and GPU companies in Chinese mainland should turn pressure into motivation and accelerate the pace of independent innovation. By increasing R&D investment, we will break through key technical bottlenecks, build an independent and controllable supply chain system, and reduce excessive dependence on external supply chains. At the same time, it actively seeks diversified cooperation with international semiconductor companies, broadens international cooperation channels, and jointly responds to the scientific and technological hegemony of the United States. In the face of the technology blockade in the United States, AI and GPU companies in Chinese mainland should turn pressure into motivation and accelerate the pace of independent innovation. By increasing R&D investment, we will break through key technical bottlenecks, build an independent and controllable supply chain system, and reduce excessive dependence on external supply chains. At the same time, it actively seeks diversified cooperation with international semiconductor companies, broadens international cooperation channels, and jointly responds to the scientific and technological hegemony of the United States.
In the current international political and economic environment, TSMC's decision has undoubtedly added new uncertainties and variables to the global competition situation of the semiconductor industry.
To sum up, TSMC's decision undoubtedly brings great challenges to the semiconductor industry in Chinese mainland, but it is also an opportunity for transformation and upgrading. Semiconductor companies in Chinese mainland need to accelerate technological innovation, improve independent research and development capabilities, and build a diversified supply chain system to cope with the uncertainty of the external environment. At the same time, the government and enterprises should work together to promote industrial upgrading and strengthen international cooperation to ensure the healthy development of the semiconductor industry and the country's scientific and technological security.
The timeline of events compiled by China Exportsemi for you
November 8, 2024: TSMC sent an email to AI chip customers in Chinese mainland, announcing that it will completely suspend the supply of all chips with 7 nanometer (nm) and higher processes to AI/GPU customers in Chinese mainland starting November 11.
November 10, 2024: Reuters exclusively reported that the U.S. Department of Commerce sent a letter to TSMC explicitly requesting that the supply of AI chips with 7nm and higher processes to customers in Chinese mainland be stopped from November 11.
November 11, 2024: TSMC officially implemented the requirements of the U.S. Department of Commerce and suspended the supply of AI chips with 7nm and more advanced processes to customers in Chinese mainland from November 11. At the same time, TSMC conducted a review of the order to ensure compliance with U.S. regulations.
November 12, 2024: Cailian News Agency reported that the news of TSMC's shutdown of 7nm AI chips in mainland China continues to ferment, and chip design companies in Chinese mainland are actively looking for new chip foundries to cope with the challenges caused by TSMC's supply outage.
