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US bans 7 Chinese companies for supplying chips to the army

It has been The Washington Post that has given the news and as such, it is an American media that confirms that the United States has decided to make a move against what it considers an attack against national security, which includes TSMC, the Chinese army and companies like Tianjin Phytium Information Techology in China. Why so much controversy?

Tianjin Phytium blacklisted and TSMC in the eye of the hurricane

Although there have been no less than 7 Chinese supercomputing entities that have entered the US black list, the case of Tianjin is the most striking for all that it represents.

The story is straightforward, but it gets a bit tangled up when jumping: TSMC struck a deal with Tianjin Phytium Information Technology to provide chips that would be intended for enterprise applications and servers. So far everything is correct, except for the fact that these processors had to be manufactured at 7 nm and 5 nm respectively, which leaves us with TSMC as the only possible ally in a short period of time.

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The problem is that these processors and according to the US Department of Commerce are not being used for this purpose, but are being diverted to a military installation in southwest China, specifically at the Research and Development Center. China Aerodynamic (CARDC).

Somehow, the US has found Phytium material and they claim they are simulating heat and drag effects for hypersonic missiles, which apparently would be destined to target US Navy aircraft carriers that plow through the region.

TSMC denies supplying chips to the Chinese military

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If we know something about TSMC, it is that it is very hermetic in terms of providing customer lists or volumes, therefore, the Minister of Economic Affairs of Taiwan has had to come out in defense of TSMC to affirm that this company based in her country complied with local international regulations.

And this is where the story gets complicated, since it discovered that TSMC does not supply chips directly to Phytium, but instead purchases them from a middleman. That is, TSMC sells the chips to a company called AIchip Technologies LTD, which is the one that supplies Phytium and where both would also have an agreement so that the chips were not for military use.

In short, there are two anti-military agreements, two Chinese companies involved as intermediaries for the army, the US has proof that the chips are in their hands and all deny that the exchange exists. Meanwhile, the production or volume of these chips is unknown at 7 nm and 5 nm, but it should not be very high due to the existing demand, but for the US there are already more than they should.

For this reason, many companies are taking their factories out of China and investing in places like Vietnam, where to name one of the big ones, Foxconn is already creating its new Fab to move production to that country.