Chinese AI Chip Firms Simplify Designs to Maintain TSMC Production

SINGAPORE, June 5 (Reuters) - Some Chinese AI chip companies are now designing less powerful processors to retain access to Taiwan Semiconductor Manufacturing Co (TSMC) production amid U.S. sanctions, according to four sources. These sanctions aim to curb China's advancements in AI and supercomputing by restricting exports of advanced processors and manufacturing equipment from companies like Nvidia, and prevent TSMC, which relies on U.S. tools, from fulfilling such orders. The latest U.S. export controls from October have highlighted China's limited advanced chip production capacity and dependence on TSMC.

Two major Chinese AI chip firms, MetaX and Enflame, submitted downgraded chip designs to TSMC in late 2023 to comply with the restrictions. MetaX introduced a simpler chip, the C280, after running out of its advanced C500 GPU earlier this year. Both MetaX and Enflame did not comment on the matter. TSMC stated it ensures compliance with relevant regulations without commenting on specific customers. MetaX and Enflame are among the "little giants" recognized for their potential in critical sectors and receive state support.

China has intensified efforts to achieve chip self-sufficiency, investing over $100 billion since 2014. Despite having 44 foundries, only Semiconductor Manufacturing International Corp (SMIC) can produce advanced GPUs, previously allocated mainly to Huawei. Recently, SMIC began supporting other Chinese AI chip firms sanctioned by the U.S., including state-backed Cambricon, which has faced supply pressures due to the restrictions. China accuses the U.S. of misusing national security concerns to suppress Chinese companies.