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.

It turns out that TSMC did not voluntarily stopped supply of advanced AI processors, it was told to by the American government.

The new order, set to take effect on Monday, comes weeks after TSMC notified the Commerce Department 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.

China’s semiconductor index surged to nearly a three-year peak on Monday, fueled by expectations that new U.S. export restrictions on Taiwan Semiconductor Manufacturing Co. (TSMC) could expedite China’s push for semiconductor self-sufficiency.

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.