The South China Morning Post reported on April 13 that TSMC said it has suspended accepting new orders from Tianjin Feiteng. A source revealed that TSMC will complete the orders before the U.S. Department of Commerce places Tianjin Feiteng on its list of entities. Photo shows TSMC. (SAM YEH/AFP via Getty Images)
Last week, the U.S. Department of Commerce imposed export controls on seven Chinese supercomputer entities. The media reported that Taiwanese chip makers began to stop exporting chips for the blacklisted Tianjin Feiteng.
On April 8, the Commerce Department placed seven Chinese supercomputer companies and research institutions, including Tianjin Feiteng Information Technology Co. which works with several Taiwanese chip suppliers.
The China Post reported that the Feiteng chips are produced in Taiwan’s most advanced chip factories and that the final stages of Feiteng chip design are done by Taiwan’s Worldcore.
The South China Morning Post reported on April 13 that TSMC said it had suspended accepting new orders from Tianjin Feiteng. A source said TSMC will complete the orders before the U.S. Commerce Department puts Tianjin Feiteng on its list of entities.
A TSMC representative declined to comment on the matter, but said the company will “continue to comply with all laws and regulations and will operate in accordance with export restrictions,” the report said, without further elaboration.
Tianjin Feiteng, which develops central processors for supercomputers and personal computing devices, is one of the companies at the center of China’s plan to increase self-reliance in core chip components.
The U.S. Department of Commerce said the seven blacklisted companies all work with the Communist Party’s military, developing supercomputers for the military and engaging in destabilizing Communist Party military development efforts, including the development of hypersonic weapons.
The Nikkei Asian Review reported on April 13 that Taipei-listed Alchip Technologies provides chip design services and intellectual property to Feiteng and helps Feiteng outsource chip production to TSMC.
“This is the first time we’ve had a customer listed as an entity,” Johnny Shen, chief executive officer and president of Alchip, told investors Tuesday, referring to the U.S. trade blacklist. “All of our business with Feiteng …… including chip production with (TSMC), is on hold.”
Worldcore said Feiteng produced written information that the chips were not for military use. The company said it would seek an export license from the U.S. Bureau of Industry and Security to resume its business relationship with Feiteng, but said it could not estimate when or if such a license would be granted.
The Nikkei reports that according to export control lawyers and the Bank for International Settlements, suppliers must apply for an export license to supply these companies with any product with more than 25 percent U.S. technology (known as the de minimis rule).
But this de minimis rule can be lowered or even eliminated. The U.S. added Huawei Technologies to the list of entities in 2019 and lowered the applicable de minimis percentage from 25 percent to 0 percent, effectively barring all global suppliers from using any U.S. technology to provide services to Huawei. This stricter rule cuts off Huawei’s access to important chip supplies, including blocking Huawei’s access to chips from TSMC and Samsung.
Harry Clark, a trade expert and partner at U.S. law firm Orrick, told the Nikkei Asian Review that suppliers should be aware that export control laws can change suddenly. He said clients should “establish and strictly and consistently enforce compliance arrangements” so that their products do not end up being used by the Chinese (Communist Party) military.
Voice of America reports that Taiwan’s Economy Minister Wang Meihua said Wednesday that Taiwanese chipmakers will take care to export in compliance with U.S. regulations.
She said chip manufacturers and exporters must comply with Taiwan’s regulations, and as for the new U.S. regulations, exports from the manufacturers concerned will also comply with the elements of the U.S. regulations.
Taiwan’s Foreign Minister Wu Chiu-sup also said last Wednesday that the Republic of China government will cooperate with the United States to monitor its chip suppliers. He said the ROC government wants to “ensure that Taiwan’s semiconductor supply to China is consistent with broader U.S. strategic objectives.”
“The ROC government has been working closely with the U.S. to ensure that the supply chain benefits not only Taiwan, but also the broader international community, particularly like-minded countries, and we need to follow those guidelines,” he said. He said.
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