Taiwan Semi, Samsung, Intel May Face Stricter US Rules on Chip Exports to China Over Security Concerns

Taiwan Semiconductor Manufacturing Co TSM, Samsung Electronics SSNLF, and Intel Corp INTC could face more cumbersome export regulations as the U.S. aims to restrict China’s access to advanced chips, citing national security threats.

The Biden administration’s latest measures seek to encourage the chipmakers to analyze and perform more due diligence on customers carefully, Bloomberg cites unnamed sources familiar with the matter.

Prior reports alleged Taiwan Semiconductor-made chips finding a way to the blacklisted Chinese company Huawei Technologies Co.

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The latest sanctions, likely to be announced on Wednesday, could limit Nvidia Corp NVDA and rivals’ sales of AI chips to data centers in the U.S.’s non-ally countries like China and Russia.

The U.S. could restrict the export of advanced chips, implying those 14 or 16 nanometers and below, and mandate a government license to sell them in China and other restricted nations.

The suggested regulations aim to help chip manufacturers identify which designs, from which customers, are subject to U.S. semiconductor sanctions.

The U.S. aims to target more sophisticated processors, namely, AI accelerators designed by Chinese companies.

The U.S., Europe, and Japan ramped up their focus on their domestic semiconductor positions to reduce dependence on China by tapping chipmakers like Taiwan Semiconductor following the 2020 pandemic that disrupted the global supply chains.

Additionally, the U.S. started restricting China’s access to advanced semiconductor technology from Nvidia and Taiwan Semiconductor, which Washington alleged China utilized to boost its military warfare position.

The U.S. also encouraged its allies, including Taiwan and the Netherlands (home to chip equipment maker ASML Holding ASML, to restrict semiconductor trade with China.

Taiwan Semiconductor commanded a 64% global foundry business share in the third quarter of 2024. Samsung scored second with a 12% share backed by its 4nm and 5nm processes.

Investors can gain exposure to stocks of companies that manufacture semiconductors through the VanEck Semiconductor ETF SMH and the iShares Semiconductor ETF SOXX.

Price Action: TSM stock closed higher by 0.26% at $201.97 premarket at the last check on Wednesday.

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