The Tightening Grip: US Restrictions on Chip Exports to China
The global semiconductor landscape is experiencing a significant shift, driven by escalating geopolitical tensions and concerns over advanced technology falling into the wrong hands. At the heart of this change are increasingly stringent regulations placed on the export of high-performance chips to China, particularly those crucial for the development and deployment of advanced artificial intelligence (AI) systems.
The Role of TSMC and US Sanctions
Taiwan Semiconductor Manufacturing Company (TSMC), the world’s leading chip manufacturer, has found itself at the center of this controversy. Following requests from the US government, TSMC implemented restrictions on shipping advanced chips to Chinese customers. Initially, this involved halting the export of chips manufactured using a 7-nanometer (nm) process node or smaller. These chips possess the computational power required for training large AI models and are considered strategically important. These actions were in direct response to US sanctions aimed at limiting China’s access to cutting-edge technologies.
Escalating Restrictions: A Deeper Dive into 2025’s Changes
The restrictions weren’t limited to previous actions; new measures implemented in early 2025 significantly tightened the screws. These new rules, implemented on January 31st, focused on preventing Chinese companies from acquiring crucial chip-making capabilities. Specifically, Chinese companies designing chips ("fabless" companies, which do not own manufacturing plants) are now facing hurdles in ordering chip production from TSMC using the 16nm process node or finer.
To receive these chips, Chinese companies must now utilize a third-party packaging house that has been approved by the US government. This requirement significantly increases the complexity and cost of procuring advanced chips. The implications extend beyond TSMC: the requirement aims at indirectly controlling the entire supply chain, ensuring a check and balance across the manufacturing process.
The Transistor Threshold: A New Metric for Control
Further amplifying the pressure is a new rule limiting the export of chips containing more than 30 billion transistors manufactured using 16nm or more advanced processes. Unless a license is obtained from the US Department of Commerce, these chips cannot be sent to China. This restriction directly targets high-performance chips like advanced GPUs vital for AI development. The 30-billion-transistor limit serves as a new metric for controlling the capabilities of chips exported to China.
The US government’s strategy is multifaceted, making sure that advanced computing abilities are not readily available to potentially unsanctioned companies. This is a departure from the previous restrictions related only to the manufacturing processes.
A Case Study: DeepSeek and the Nvidia H800
The complexities of these regulations are highlighted by the investigation into DeepSeek, a Chinese company reportedly using Nvidia H800 GPUs for AI training. These GPUs, boasting approximately 80 billion transistors and manufactured using a 4nm process node, significantly exceed the new transistor limit. The investigation seeks to determine how DeepSeek acquired these chips, possibly involving an intermediary in Singapore. While Nvidia has claimed that it believes DeepSeek did not violate the law, they insisted that their partners must follow all legal regulations.
This case exemplifies the challenges faced by both companies and governments attempting to navigate the evolving regulatory landscape. It also highlights the complexities of enforcing sanctions in a globalized supply chain.
Exceptions and the Future of Semiconductor Trade
Despite the stringent restrictions, some companies, including Apple, AMD, Intel, MediaTek, and others, are expected to receive licenses for chips exceeding the 30 billion transistor limit. This indicates a degree of flexibility in the application of the rules, with an emphasis on strategic considerations and the broader impact on legitimate business operations.
However, the rules have significantly altered the semiconductor business landscape, even impacting chips previously shipped without restriction. Mainstream GPUs from companies like AMD, Intel, and Nvidia now necessitate licenses for export to China.
In certain instances, TSMC’s self-imposed restrictions surpassing US regulations showcase a proactive approach to international compliance. This approach demonstrates a level of corporate responsibility exceeding legal requirements, indicating an understanding of the sensitive geopolitical environment.
The Broader Implications
The ongoing situation underscores the strategic importance of semiconductor technology in the global competition for technological dominance. The restrictions imposed on China represent a significant challenge to its ambitions in AI and other advanced fields. The effects are likely to impact multiple sectors of global technology production, research and development, and the deployment of AI systems worldwide.
This continuous evolution of export controls highlights the complex interplay between national security concerns, technological advancement, and international trade. The situation is far from static; further adjustments to these rules are anticipated as both the US and China engage in a complex technological and economic balancing act.
