Hey, did you hear that TSMC is stopping production of advanced AI chips for China?

Yes! TSMC wants to make sure it's following U.S. rules. They’re halting production on AI chips that are 7 nanometers or smaller for Chinese companies.

Why 7 nanometers? What’s special about that?

Good question! The smaller the nanometers, the more advanced the chip. 7 nanometers and below are powerful enough for complex AI tasks, which is why the U.S. doesn’t want these going to China.

Ah, so it’s about keeping the tech out of certain hands. But why is TSMC, a Taiwanese company, listening to the U.S.?

TSMC uses a lot of American technology to make these chips. If they break U.S. export rules, they could face penalties, or even lose access to crucial equipment and software.

Got it. So this decision will affect Chinese companies that rely on TSMC, like… Baidu and Alibaba, right?

Exactly. Both of those companies have been investing a lot in their own AI chips. Baidu’s Kunlun II chip, for example, is made by TSMC and is really important for their AI projects.

Wow, so if TSMC stops making chips for them, Baidu and Alibaba could fall behind in AI?

Yes, it’ll be a setback for them. They’ll need to find another way to make advanced chips, which could be tough without TSMC.

I see. But isn’t TSMC worried about losing business with these Chinese companies?

Apparently, not too much. TSMC’s revenue is mostly from big clients like Apple and NVIDIA. Losing some Chinese business won’t hurt them as much.

That makes sense. So, are they doing this because of pressure from the U.S. government?

Partly, yes. And with the U.S. elections bringing changes, TSMC probably wants to stay on good terms with the U.S., especially if stricter controls are coming.

Makes sense. This is all part of that tech rivalry between the U.S. and China, right?

Yes, exactly. The U.S. wants to keep its lead in AI and prevent China from advancing too quickly. Cutting off advanced chips is one way to do that.

It’s like a tech ‘cold war’ in a way. I didn’t realize chips were so important.

They really are! Chips are the backbone of all modern technology. That’s why this decision from TSMC is a big deal for both countries.

Interesting! It sounds like these restrictions will affect a lot of future technology, not just AI.

Definitely. We’ll have to see how companies adapt and if China finds a way to make its own advanced chips in response.

Thanks for explaining! I’ll keep an eye on this — sounds like it’s only going to get more intense.