Several Chinese AI chip companies are now designing less powerful processors to maintain access to Taiwan Semiconductor Manufacturing Co (TSMC) (2330.TW) production amid U.S. sanctions, according to four sources familiar with the situation.
To hinder advancements in artificial intelligence and supercomputing by China’s military, Washington has implemented a series of export controls on sophisticated processors from companies such as Nvidia (NVDA.O) and on chip manufacturing equipment. These restrictions also prevent TSMC, which uses U.S. chipmaking tools, along with other overseas manufacturers, from producing these high-end chips.
The latest U.S. export controls, imposed in October, have highlighted China’s limited capacity to produce advanced chips and its dependency on TSMC, the world’s leading chip contract manufacturer, the sources noted. Due to the sensitivity of the matter, all four sources, including one with direct knowledge, requested anonymity.
Two leading Chinese AI chip firms, MetaX and Enflame, submitted downgraded chip designs to TSMC in late 2023 to comply with U.S. restrictions, according to two of the sources. These companies had previously marketed their chips as comparable to Nvidia’s graphics processing units (GPUs).
Shanghai-based MetaX has developed a downgraded product called the C280, with its most advanced GPU, the C500, running out of stock in China earlier this year, the sources said. MetaX, founded in 2020 by former Advanced Micro Devices (AMD.O) executives, did not respond to a Reuters request for comment.
Enflame, also based in Shanghai and founded in 2018, did not respond to a request for comment either. Supported by tech giant Tencent (0700.HK), Enflame raised $2.7 billion last year.
TSMC declined to comment on individual customers, stating only that it works with clients to ensure compliance with relevant jurisdictions.
