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Samsung and TSMC Won’t Supply Advanced Chips to China

by | Nov 13, 2024 | Exynos, News

The U.S. has ordered two of the biggest foundries globally, Samsung and TSMC, to halt advanced chip shipments to China. As for what comes next, the two foundry giants won’t supply 7nm and below chips to Chinese clients. These advanced chips play a vital role in artificial intelligence applications.

Almost everyone with a knack for geopolitics could have seen this coming, especially after Donald Trump won the election. Trump’s pro-national policies meant bad news for China, particularly on trade issues. While Trump has yet to assume office, the order shows that things are moving in the direction he’d have wanted.

Samsung and TSMC’s 7nm and below chips won’t help China accomplish its AI goals

Samsung hasn’t officially confirmed it yet, though it has reportedly notified its clients about the recent ban. While TSMC had little to lose in the Chinese markets, given its greater focus on the U.S., Europe, and Asian markets, Samsung Foundry remained an alternative. This ban could have an adverse effect on its business, especially since it comes at a time when Samsung Foundry is struggling with low yield rates and has reportedly suffered significant losses.

A recent report coming from Taiwan says TSMC might not be able to produce the most advanced 2nm chips outside of Taiwan. This gives Samsung a solid opportunity to make some dollars again, as it’s reportedly planning to ramp up 2nm production at its U.S. facility.

How would China tackle this?

China and U.S. relations have been a seesaw in recent years. While the two countries hold friendly diplomatic relations, they aren’t dependent on each other. For example, when the U.S. banned Huawei devices and urged Google not to provide access to Android, the Chinese company quickly developed its own HarmonyOS software, which, apparently, isn’t a forked version of Android AOSP but a completely new operating system.

Similarly, China has also made decisions such as blocking American apps and services, pushing its homegrown alternatives over those. What remains to be seen is how China will address this, especially considering that China is home to companies like Pingtouge and SMIC.

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