U.S. Sanctions Against China Will Impact Taiwan, So Will CHIPS Act: Official

City of Taipei at sunset, Taiwan
(Image credit: Shutterstock)

The recently imposed U.S. sanctions against Chinese semiconductor and supercomputer sectors will affect exports from Taiwan, and so will Chinese COVID lockdowns, warned a Taiwanese economic official, reports Bloomberg (opens in new tab). In addition, the U.S. CHIPS and Science Act poses uncertainty to the island’s chipmakers.

Chinese companies buy a boatload of chips from TSMC and UMC, as local makers cannot produce chips made on advanced production nodes. China-based SMIC’s manufacturing capacity for more or less advanced nodes is reasonably limited. But after the U.S. imposed restrictions on the Chinese supercomputer sector, China-based companies cannot buy advanced chips made in Taipei using American technologies (and therefore, they do not need some of the companion chips fabbed on mature nodes), sales of TSMC and UMC will be affected.

TSMC produces high-end AI/ML and HPC processors for companies like AMD, Biren, and Nvidia. Since the U.S. imposed its curbs against Chinese supercomputer segments, Nvidia came up with a cut-down version of its A100 compute GPU called A800, but it will take time before its Chinese clients validate it with their systems. While they are doing it, sales of Nvidia and TSMC will suffer.

Chinese anti-COVID lockdowns will also affect sales of chips made in Taiwan because fabs in China reduce production and therefore do not need as many chips as they usually do.

Because of restrictions against Chinese supercomputer sectors and lockdowns in China, Taiwan expects its gross domestic product growth in 2022 and 2023 to drop to 3.06% and 2.75%, respectively, according to Tsai Yu-Tai, head of statistics for the Directorate-General of Budget, Accounting, and Statistics.

But while short-term things like lockdowns and curbs will immediately affect sales of chips produced in Taiwan, the country’s officials also worry about U.S. CHIPS and Science Act that will encourage companies to build fabs in the USA, a similar move by the European Union. Taiwan has already responded to both acts with tax breaks for chipmakers and high-tech companies. Still, it has not announced any grants to semiconductor firms, which worries the government.

“The uncertainty from these acts will affect Taiwan’s production and exports, although the scale of impact is still unclear,” said Tsai.

Anton Shilov
Freelance News Writer

Anton Shilov is a Freelance News Writer at Tom’s Hardware US. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.