Semiconductors

TSMC struggles to block chip exports to China

Taiwan Semiconductor Manufacturing Company (TSMC) has acknowledged it faces significant challenges in ensuring its advanced chips do not end up with sanctioned entities in China, despite tightening export controls.

The company admitted in its latest annual report that its position as a contract chipmaker limits its visibility into how and where its semiconductors are ultimately used.

Instead of directly selling finished products, TSMC manufactures chips for firms like Nvidia and Qualcomm, which are then integrated into a wide range of devices by third parties.

Α layered supply chain structure like this makes it difficult for the company to guarantee full compliance with export restrictions, especially when intermediaries may divert shipments intentionally.

TSMC halted deliveries to a customer last year after discovering one of its AI chips had been diverted to Huawei, a Chinese tech giant on the US sanctions list. The company promptly notified both Washington and Taipei and has since cooperated with official investigations and information requests.

The US continues to tighten restrictions on advanced chip exports to China, urging companies like TSMC and Samsung to apply stricter scrutiny.

Recently, Washington blacklisted 16 Chinese entities, including firms allegedly linked to the unauthorised transfer of TSMC chips. Despite best efforts, TSMC says there is no assurance it can completely prevent such incidents.

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TSMC profits surge despite trade concerns

Taiwan Semiconductor Manufacturing Company (TSMC) posted a significant jump in quarterly profits, driven by robust demand for AI chips. Net income rose by just over 60% year-on-year to NT$360.7bn (£9.77bn), outpacing analysts’ expectations.

Revenue also grew by 41.6% compared to the same period in 2024, although it dipped slightly from the previous quarter due to weaker smartphone sales.

The world’s largest contract chipmaker has not yet seen any major changes in customer behaviour, including from Apple and Nvidia, despite increasing uncertainty over potential US tariffs on Taiwanese semiconductors.

While concerns about trade tensions grow, particularly with former President Donald Trump suggesting the US should reclaim chip production, TSMC says it is continuing with business as usual for now.

Instead of scaling back, TSMC is expanding its investment in the US, with plans to spend up to $160bn. Analysts believe this move could help the firm argue for a more favourable position should tariff negotiations intensify.

The company’s Chief Financial Officer, Wendell Huang, acknowledged the risks posed by changing trade policies but said revenue growth is still expected in the next quarter.

Despite global pressures, TSMC remains optimistic, forecasting revenue between $28.4bn and $29.2bn. Although the company’s shares have fallen more than 20% so far this year, some analysts say the stock is now undervalued and well-positioned to rebound once market conditions stabilise.

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AMD warns of financial hit from US AI chip export ban

AMD has warned that new US government restrictions on exporting AI chips to China and several other countries could materially affect its earnings.

The company said it may face charges of up to $800 million related to unsold inventory, purchase commitments, and reserves if it fails to secure export licences for its MI308 GPUs, now subject to strict control measures.

In a filing to the US Securities and Exchange Commission, AMD confirmed it would seek the necessary licences but admitted there is no guarantee they will be granted.

The move follows broader export restrictions aimed at protecting national security interests, with US officials arguing that unrestricted access to advanced chips would weaken the country’s strategic lead in AI, instead of preserving it.

AMD’s stock dropped around 6% following the announcement. Competitors are also feeling the impact. Nvidia expects charges of $5.5 billion from similar restrictions, and Intel’s Gaudi hardware line has reportedly been affected as well.

The US Commerce Department has defended the move as necessary to safeguard economic and national interests.

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Microsoft unveils powerful lightweight AI model for CPUs

Microsoft researchers have introduced the largest 1-bit AI model to date, called BitNet b1.58 2B4T, designed to run efficiently on standard CPUs instead of relying on GPUs. This ‘bitnet’ model, now openly available under the MIT license, can even operate on Apple’s M2 chips.

Bitnets use extreme weight quantisation, storing only -1, 0, or 1 as values, making them far more memory- and compute-efficient than most conventional models.

With 2 billion parameters and trained on 4 trillion tokens, roughly the equivalent of 33 million books, BitNet b1.58 2B4T outperforms several similarly sized models in key benchmarks.

Microsoft claims it beats Meta’s Llama 3.2 1B, Google’s Gemma 3 1B, and Alibaba’s Qwen 2.5 1.5B on tasks like grade-school maths and physical reasoning. It also runs up to twice as fast while using significantly less memory, offering a potential edge for lower-end or energy-constrained devices.

The main limitation lies in its dependence on Microsoft’s custom bitnet.cpp framework, which supports only select hardware and does not yet work with GPUs.

Instead of being broadly compatible with existing AI systems, BitNet’s performance depends on a narrower infrastructure, a hurdle that may limit adoption, despite its promise for lightweight AI deployment.

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Europe struggles to explain quantum to its citizens

Most Europeans remain unclear about quantum technology, despite increasing attention from EU leaders. A new survey, released on World Quantum Day, reveals that while 78 per cent of adults in France and Germany are aware of quantum, only a third truly understand what it is.

Nearly half admitted they had heard of the term but didn’t know what it means.

Quantum science studies the smallest building blocks of the universe, particles like electrons and atoms, that behave in ways classical physics can’t explain. Though invisible even to standard microscopes, they already power technologies such as GPS, MRI scanners and semiconductors.

Quantum tools could lead to breakthroughs in healthcare, cybersecurity, and climate change, by enabling ultra-precise imaging, improved encryption, and advanced environmental monitoring.

The survey showed that 47 per cent of respondents expect quantum to positively impact their country within five years, with many hopeful about its role in areas like energy, medicine and fraud prevention.

For example, quantum computers might help simulate complex molecules for drug development, while quantum encryption could secure communications better than current systems.

The EU has committed to developing a European quantum chip and is exploring a potential Quantum Act, backed by €65 million in funding under the EU Chips Act. The UK has pledged £121 million for quantum initiatives.

However, Europe still trails behind China and the US, mainly due to limited private investment and slower deployment. Former ECB president Mario Draghi warned that Europe must build a globally competitive quantum ecosystem instead of falling behind further.

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Seoul unveils $4.9 billion chip support package

South Korea has announced a $4.9 billion boost to its semiconductor industry amid concerns over possible US tariffs targeting key export sectors.

The government plans to increase its total chip support package from $18.2 billion to $23.1 billion, in what officials describe as an urgent effort to shield the economy from intensifying global trade tensions.

President Donald Trump’s threat of a 25 percent tariff on South Korean goods has unsettled markets and raised fears for the country’s vital semiconductor and automotive industries.

Although the United States tariffs were temporarily suspended for 90 days, South Korea’s finance minister Choi Sang-mok said that duties on sectors such as chips and pharmaceuticals still remain a possibility. He urged swift action during what he called a ‘crucial window’ to keep South Korea competitive on the global market.

The expanded investment will fund infrastructure, talent development, and support for new chip clusters currently under construction. The measure is part of a broader $8.4 billion revised supplementary budget that requires approval from the National Assembly.

In addition to the chip support, Seoul has also rolled out a $2 billion emergency package for carmakers facing potential US tariffs, as the country works to navigate growing uncertainty in global trade.

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AI chip production begins at TSMC’s Arizona facility

Nvidia has announced a major initiative to produce AI supercomputers in the US in collaboration with Taiwan Semiconductor Manufacturing Co. (TSMC) and several other partners.

The effort aims to create up to US$500 billion worth of AI infrastructure products domestically over the next four years, marking a significant shift in Nvidia’s manufacturing strategy.

Alongside TSMC, other key contributors include Taiwanese firms Hon Hai Precision Industry Co. and Wistron Corp., both known for producing AI servers. US-based Amkor Technology and Taiwan’s Siliconware Precision Industries will also provide advanced packaging and testing services.

Nvidia’s Blackwell AI chips have already begun production at TSMC’s Arizona facility, with large-scale operations planned in Texas through partnerships with Hon Hai in Houston and Wistron in Dallas.

The move could impact Taiwan’s economy, as many Nvidia components are currently produced there. Taiwan’s Economic Affairs Minister declined to comment specifically on the project but assured that the government will monitor overseas investments by Taiwanese firms.

Nvidia said the initiative would help meet surging AI demand while strengthening semiconductor supply chains and increasing resilience amid shifting global trade policies, including new US tariffs on Taiwanese exports.

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South Korea’s $23B chip industry boost in response to global trade war

South Korea announced a $23 billion support package for its semiconductor industry, increasing from last year’s $19 billion to protect giants like Samsung and SK Hynix from US tariff uncertainties and China’s growing competition. 

The plan allocates 20 trillion won in financial aid, up from 17 trillion, to drive innovation and production, addressing a 31.8% drop in chip exports to China due to US trade restrictions.

The package responds to US policies under President Trump, including export curbs on high-bandwidth chips to China, which have disrupted global demand. 

At the same time, Finance Minister Choi Sang-mok will negotiate with the US to mitigate potential national security probes on chip trade. 

South Korea’s strategy aims to safeguard a critical economic sector that powers everything from smartphones to AI, especially as its auto industry faces US tariff challenges. 

Analysts view this as a preemptive effort to shield the chip industry from escalating global trade tensions.

Why does it matter?

For South Koreans, the semiconductor sector is a national lifeline, tied to jobs and economic stability, with the government betting big to preserve its global tech dominance. As China’s tech ambitions grow and US policies remain unpredictable, Seoul’s $23 billion investment speaks out about the cost of staying competitive in a tech-driven world.

Nvidia hit by the new US export rules

Nvidia is facing fresh US export restrictions on its H20 AI chips, dealing a blow to the company’s operations in China.

In a filing on Tuesday, Nvidia revealed it now needs a licence to export these chips indefinitely, after the US government cited concerns they could be used in a Chinese supercomputer.

The company expects a $5.5 billion charge linked to the controls in its first fiscal quarter of 2026, which ends on 27 April. Shares dropped around 6% in after-hours trading.

The H20 is currently the most advanced AI chip Nvidia can sell to China under existing regulations.

Last week, reports suggested CEO Jensen Huang might have temporarily eased tensions during a dinner at Donald Trump’s Mar-a-Lago resort, by promising investments in US-based AI data centres instead of opposing the rules directly.

Just a day before the filing, Nvidia announced plans to manufacture some chips in the US over the next four years, though the specifics were left vague.

Calls for tighter controls had been building, especially after it emerged that China’s DeepSeek used the H20 to train its R1 model, a system that surprised the US AI sector earlier this year.

Government officials had pushed for action, saying the chip’s capabilities posed a strategic risk. Nvidia declined to comment on the new restrictions.

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Nvidia brings AI supercomputer production to the US

Nvidia is shifting its AI supercomputer manufacturing operations to the United States for the first time, instead of relying on a globally dispersed supply chain.

In partnership with industry giants such as TSMC, Foxconn, and Wistron, the company is establishing large-scale facilities to produce its advanced Blackwell chips in Arizona and complete supercomputers in Texas. Production is expected to reach full scale within 12 to 15 months.

Over a million square feet of manufacturing space has been commissioned, with key roles also played by packaging and testing firms Amkor and SPIL.

The move reflects Nvidia’s ambition to create up to half a trillion dollars in AI infrastructure within the next four years, while boosting supply chain resilience and growing its US-based operations instead of expanding solely abroad.

These AI supercomputers are designed to power new, highly specialised data centres known as ‘AI factories,’ capable of handling vast AI workloads.

Nvidia’s investment is expected to support the construction of dozens of such facilities, generating hundreds of thousands of jobs and securing long-term economic value.

To enhance efficiency, Nvidia will apply its own AI, robotics, and simulation tools across these projects, using Omniverse to model factory operations virtually and Isaac GR00T to develop robots that automate production.

According to CEO Jensen Huang, bringing manufacturing home strengthens supply chains and better positions the company to meet the surging global demand for AI computing power.

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