TAIPEI (Taiwan News) – US senators have called for tighter export controls on TSMC chips to protect national security and industrial competitiveness.
US lawmakers are pressing regulators to close a loophole that could allow Chinese firms to access advanced AI chips via shell companies ordering from TSMC. The move underscores growing concern that existing export controls may be circumvented despite sweeping restrictions imposed since 2022, per Reuters.
In a letter on Monday to the Commerce Department’s Bureau of Industry and Security, Senator Jim Banks and Senator Andy Kim warned that failure to act would undermine US efforts to curb China’s access to advanced computing power.
“If this loophole remains unaddressed, it will significantly weaken all other measures,” they wrote, arguing that national security and industrial competitiveness are at risk, per Reuters.
TSMC had not commented as of Tuesday, while industry analysts said major global firms generally comply with US export rules. The company has stated it follows all applicable regulations and sanctions requirements, per the Economic Daily News.
The US first imposed export controls in 2022 to block China from acquiring high-end chips such as Nvidia processors without a license, aiming to limit potential military applications. On May 31, the Commerce Department expanded guidance to prevent Chinese firms from obtaining chips through overseas subsidiaries, including those based in Malaysia or other jurisdictions, per Reuters.
Under the updated rules, subsidiaries of China-based parent companies must still seek approval before purchasing advanced chips such as Nvidia’s Rubin and Blackwell series or AMD’s MI350X. However, these measures do not fully address the risk of shell companies placing orders with leading foundries like TSMC, per Reuters.
Chris McGuire of the Council on Foreign Relations noted that shell entities could obscure the true end user, creating enforcement challenges. This gap, analysts argue, leaves a critical vulnerability in Washington’s broader technology containment strategy, per Chris McGuire.
Previously, TSMC said it cannot ensure its products do not reach bad actors through customers or third parties, per TSMC. It also noted that export controls often depend on specific chip performance characteristics that foundries cannot independently verify.
