TSMC Said to Have Suspended Work for Chinese Chip Startup Amid US Curbs

Introduction

In October 2022, reports emerged that Taiwan Semiconductor Manufacturing Company (TSMC) had suspended production or development support for a Chinese AI / GPU chip startup, Biren Technology, citing the need to comply with U.S. export controls. This move symbolizes the intensifying technology and trade tensions between the United States and China, especially in the semiconductor and AI domains.

In this blog, we will explore:

1. The background of TSMC and Biren

2. The U.S. export control measures that potentially triggered this suspension

3. The mechanics and implications of TSMC’s decision

4. Reactions within China, in the U.S., and by global industry players

5. Larger strategic implications for the semiconductor supply chain

6. What this might mean going forward

1. Background

1.1 TSMC: The World’s Leading Foundry

TSMC (Taiwan Semiconductor Manufacturing Company) is the world’s largest independent semiconductor foundry, manufacturing chips for third-party clients (like Apple, Nvidia, AMD, etc.) Its dominance in advanced process nodes (e.g. 5 nm, 3 nm) has made it a critical chokepoint in the global semiconductor supply chain.

Because TSMC uses equipment and intellectual property tied to U.S. technology, it is subject to U.S. export and technology control rules — particularly when any chip designs or clients are seen as potentially sensitive or dual-use (civil / military) in nature.

1.2 Biren Technology: A Rising Chinese AI/Chip Startup

Biren Technology (often stylized “Biren” or is a Chinese chip designer focused on AI and GPU chips.

Some key points about Biren:

• It has positioned itself as a potential competitor to Nvidia in China, offering AI chips that might rival Nvidia’s A100 / H100 series.

• In publicly available presentations, Biren claimed that its chips (e.g. BR100) could outperform the Nvidia A100 in certain workloads.

• Prior to the suspension, Biren had contracted TSMC to manufacture its advanced silicon (e.g. using nodes like 7 nm)

• After the U.S. restrictions, Biren reportedly tried to adjust or “tone down” features to evade restrictions so that TSMC could still manufacture some derivatives.

• In October 2023, the U.S. Commerce Department added Biren to its Entity List, restricting U.S. companies from supplying certain goods or services to Biren.

Thus, Biren represents a symbol of China’s ambition to reduce reliance on foreign (especially U.S.) AI / GPU chip supply, but also the friction points that such ambition faces under U.S. export controls.

2. U.S. Export Controls & Technology Curbs

To understand why TSMC might suspend work for Biren, one needs to dig into the U.S. export control regime affecting semiconductors.

2.1 Why the U.S. Restricts Semiconductor Exports to China

The U.S. government has, over recent years, imposed stricter export controls on advanced semiconductor technologies, citing national security, military risk, and competition concerns. Some motives include:

• Preventing advanced AI / high-performance computing capability from bolstering military or dual-use systems in China

• Slowing China’s path toward technological leadership in semiconductors

• Asserting leverage in the broader U.S.–China strategic / trade competition

These controls often restrict the export of certain chip designs, manufacturing equipment, software, or technology to Chinese firms or entities flagged for potential national security concerns.

2.2 Key U.S. Rules That Affected This Case

While the precise internal legal mechanisms may not be fully public, relevant U.S. policy levers include:

• Entity List restrictions: Chinese firms added to the U.S. Commerce Department’s Entity List face licensing requirements or bans for receiving certain U.S. goods, software, or technology. Biren was added later.

• Export licensing regimes for advanced semiconductors: U.S. rules may require licenses if chips cross certain performance thresholds or are used for AI / HPC.

• “De minimis” rules: Even foreign-made devices incorporating U.S. controlled technology can be subject to U.S. control.

• Constraints tied to U.S.-origin equipment or IP used in manufacturing: Because many chip manufacturing tools or IP rights are U.S. based, even non-U.S. foundries like TSMC may face restrictions when producing certain chips for restricted parties.

• Recent moves: For example, in 2025, the U.S. revoked TSMC’s “validated end user” (VEU) status for its Nanjing facility, meaning TSMC must now get individual licenses to ship U.S.-origin chip-making tools to its China operations.

Thus, any arrangement between TSMC and a Chinese entity designing advanced AI chips must be carefully evaluated under U.S. export laws.

3. Suspension of Work: What Happened & Why

3.1 Reports of the Suspension

According to Bloomberg, TSMC had suspended production (or at least halted further progress) of advanced silicon for Biren, pending clarity on regulatory compliance.The rationale: even though TSMC had not definitively concluded whether Biren’s chip designs crossed U.S. control thresholds, it opted to pause dealings “for now” to avoid violating U.S. rules.

Other outlets echoed this: a person familiar with the matter said TSMC had decided to stop supplies to Biren until further determination.

3.2 Underlying Drivers

Why would TSMC take such a step? Some plausible drivers:

• Risk aversion / legal compliance: Because TSMC uses U.S.-origin tools and IP, any violation of U.S. export controls could lead to serious penalties (fines, sanctions, loss of export privilege).

• Regulatory pressure / signaling: U.S. authorities likely monitor potential violations closely, especially with AI / HPC chip flows to China.

• Ambiguity / uncertainty: With new rules or shifting thresholds, firms might err on the side of caution until rules are clarified.

• Reputational protection: TSMC must maintain trust with U.S. regulators, customers, and partners globally.

3.3 Scope of the Suspension

Important nuances:

• The suspension is said to be for advanced silicon (i.e. chips using more advanced process nodes) rather than all collaboration.

• The suspension pertains to future production / new orders, rather than necessarily recalling what’s already manufactured (though in practice, it may delay or cancel some in-flight orders).

• It is described as a temporary, precautionary suspension, pending regulatory clarity or determination.

• TSMC reportedly has not publicly confirmed detailed workings, likely due to sensitivity. The reports are based on “a person familiar with the matter.”

4. Reactions & Consequences

4.1 Chinese Side

• Biren’s response: After the U.S. measures, Biren reportedly sought to adjust its chip architecture to stay under U.S. thresholds, so that TSMC might resume limited manufacturing.

• State / local support: Chinese state-backed or local government investors pledged additional funding to support Biren’s survival under sanctions.

• Nationalistic push / self-reliance narrative: The suspension is seen domestically as evidence of how vulnerable Chinese innovation is to foreign controls—and further impetus for “indigenous” semiconductor capability.

• Accelerated efforts in China: Investments into homegrown fabs, design tools, and supply chains may intensify to reduce dependence on foreign foundries.

4.2 U.S. and Regulatory Side

• The U.S. likely views this as a sign that export control measures are working to slow or constrain China’s access to advanced chips.

• The suspension helps deflect risk of TSMC being in violation — and shows that companies may self-regulate to avoid punishment.

• In some related developments, TSMC has informed U.S. authorities of possible circumvention attempts (e.g. potential Huawei-related chip designs) to ensure compliance.

• Additionally, scrutiny of TSMC’s past or other sales may intensify, potentially leading to investigations or fines. In 2025, reports emerged that TSMC could face a $1 billion+ fine for alleged export violations tied to chips ending up in Huawei gear.

4.3 Industry & Global Supply Chain

• Other foundries and design firms globally will closely watch how strictly export controls are enforced, and how companies respond.

• Some chip design firms may reconsider Chinese partnerships or change chip specifications to avoid falling under restricted thresholds.

• Alternative foundries (e.g. in the U.S., Europe, Japan, South Korea) may gain as Chinese firms shift sourcing away from TSMC for advanced nodes.

• There’s increased pressure on China’s domestic semiconductor ecosystem (fabs, tools, IP) to fill the vacuum.

5. Strategic Implications

5.1 Fragmentation of the Semiconductor Ecosystem

The semiconductor value chain may increasingly bifurcate—or “decouple”—into a U.S-led / allied ecosystem versus a China / non-aligned ecosystem. Companies and countries may need to choose sides or operate under dual-system constraints.

5.2 Innovation vs. Control Tension

Strict controls may slow adversarial access, but they might also stifle innovation or investment. Chinese firms will likely double down on R&D, but indigenous progress can take time and capital.

5.3 Supply Chain Resilience & Risk

Countries reliant on chip imports may face vulnerabilities if export controls escalate. Nations like India may consider boosting domestic capacity or diversifying supply chain partners.

5.4 Diplomatic / Strategic Leverage

Export controls become not just economic levers, but instruments of geopolitical influence. The ability to deny or allow advanced chips confers strategic power.

5.5 Enforcement Credibility

The willingness of major firms like TSMC to suspend operations—even at potential revenue cost—underscores how seriously export control enforcement is taken globally.

6. What to Watch Going Forward

Here are some key developments to monitor:

Given more recent developments, the export control environment is still evolving. For example, in late 2024, TSMC was reported to suspend production of its more advanced AI chips (7 nm or smaller) for Chinese customers due to U.S. measures. And in 2025, U.S. removed TSMC’s license-free status to ship key tools to its Nanjing facility, making stricter licensing mandatory.

7. Sample Draft Blog Content (Sectioned)

Below is a cohesive sample draft you could use or adapt (for a WordPress blog):

Introduction

The global semiconductor industry now finds itself at the confluence of technology, national security, and geopolitics. A striking case in point: in October 2022, reports revealed that TSMC had suspended work for Chinese AI chip startup Biren as the foundry sought to navigate tightened U.S. export controls. This blog unpacks the motivations, ramifications, and strategic currents behind that decision.

The Players: TSMC & Biren

TSMC is widely regarded as the crown jewel of chip manufacturing — not only for its sheer scale, but also for its mastery of leading-edge process nodes. Yet this dominance comes with strings: TSMC uses U.S.-origin tools, software, and IP, pulling it into the orbit of U.S. export control regimes.

On the other side is Biren, a rising Chinese AI/GPU design firm that claimed to push performance ahead of Nvidia’s A100 in certain benchmarks. As it sought to produce chips via TSMC’s 7 nm process, it inevitably came under scrutiny from U.S. regulators.

U.S. Export Control Pressure

Over the past several years, the U.S. has steadily ratcheted up restrictions on semiconductor exports to China. Particularly, advanced computing, AI chips, and HPC/GPU capabilities fall under the crosshairs. Many of these rules hinge on whether the chip or design crosses certain performance thresholds, or whether the manufacturing involves U.S. technology. Because TSMC uses U.S.-supplied tools or IP in many parts of its operations, it cannot ignore U.S. rules even when serving non-U.S. customers.

In Biren’s case, TSMC reportedly opted to suspend work while it assessed whether Biren’s chips might exceed U.S. control thresholds, rather than risking noncompliance.

Decision to Suspend: Risks & Reasoning

From TSMC’s viewpoint, the decision reflected risk management:

• Better to pause than inadvertently violate regulations

• Maintain credibility with U.S. regulators and customers

• Allow time for legal / compliance evaluation

• Avoid severe penalties, which in similar cases can reach substantial fines

The suspension targeted advanced silicon, rather than all business, and was described as a temporary measure pending clarity.

Fallout & Industry Reaction

In China, the move reinforced narratives of foreign constraint and the urgency for tech self-reliance. Biren itself reportedly tried to reengineer its chips to avoid triggering controlled thresholds.

In the U.S., the move affirmed export control potency — a signal to other firms that compliance is nonnegotiable.

Globally, semiconductor firms, foundries, and chip designers took note: future cross-border chip deals may require deeper legal vetting, more modular chip designs, or even new supply chain architectures to handle diverging regulatory regimes.

Strategic Ramifications

This suspension is more than an isolated event — it is a manifestation of an emerging divide in how technology flows are managed globally. The semiconductor world may increasingly bifurcate into separate spheres of influence (U.S / allied vs. China / rest). Countries dependent on chips may feel pressure to build domestic capacity. Innovation dynamics may shift, as Chinese firms must rely more on indigenous tools, fabs, and design IP. And export controls become not just a trade policy tool but a strategic lever.

What Lies Ahead

Moving forward, watch for:

• U.S. regulatory clarifications or relaxations

• TSMC decisions around other Chinese deals

• Additional firms on China side facing suspensions

• China’s domestic responses: investment, policy support, capacity building

• Legal or enforcement actions (e.g. fines, investigations)

Given ongoing developments, the semiconductor export control landscape is unlikely to remain static.