China's Taiwan Affairs Office said on Wednesday that a U.S. order to Taiwan Semiconductor Manufacturing Co to halt shipments of advanced chips to some Chinese customers - as reported by Reuters - proved that the United States was "playing the Taiwan card" to raise tensions in the Taiwan Straits.

The latest effort to curb exports of critical technologies comes after reports that a TSMC product was found inside a Huawei AI chip.

Mainland China's chip design firms are anxiously waiting for any further updates from Taiwan Semiconductor Manufacturing Company (TSMC), after the world's most advanced contract chip manufacturer paused 7-nanometre node services for some artificial intelligence (AI) chip clients in the world's largest semiconductor market by consumption.

The US order comes just weeks after TSMC notified that one of its chips had been found in a Huawei AI processor.

TSMC has reportedly notified Chinese customers that shipments of AI-related chips made with 7nm or below processes will be halted. Additionally, any AI chip projects initiated after November 11 must be approved by the US Department of Commerce and other relevant agencies.

The move comes after chips made by Taiwan's largest producer were found in Huawei AI processors at the end of last month.

STORY: China’s chip index leapt to close at a three-year high on Monday (November 11). That’s on bets Beijing will accelerate its chip-making efforts after the U.S. ordered Taiwan’s TSMC to suspend shipments of advanced semiconductors to Chinese clients.

On November 11, 2024, TSMC reportedly suspended its sub-7nm process services to China's AI and GPU chipmakers following the Huawei "chip controversy," triggering widespread industry impacts and potential order transfers.

Taiwan Semiconductor Manufacturing Co (TSMC) can’t produce 2nm chips outside of Tawain, according to J.W. Kuo, the country's Minister of Economic Affairs. The Arizona fab 21 is still on track to produce 4nm chips in 2025.