The U.S. has ordered Taiwan Semiconductor Manufacturing to halt shipments of advanced chips to China in the latest move to curb exports of key U.S. technologies that could have military applications. TSM stock fell on Monday.
Reuters reported Saturday that the U.S. Commerce Department told Taiwan Semiconductor, better known as TSMC, to stop shipping to China chips made at 7-nanometer or smaller process technology. Those chips could be used for artificial intelligence applications, the report said.
TSMC's most advanced production process now uses 3-nanometer technology. Circuit widths on chips are measured in nanometers, which are one-billionth of a meter.
The U.S. order comes several weeks after TSMC revealed that one of its chips had been found in an AI processor from China tech firm Huawei.
In response, TSMC suspended shipments to at least two chip developers over suspicions they were attempting to circumvent U.S. export controls to China, Nikkei Asia reported.
On the stock market today, TSM stock fell 3.6% to close at 194.05.
In a client note, Wedbush Securities analyst Matt Bryson said he does not expect the heightened trade restrictions to have a significant impact on TSMC's revenue. However, he noted that "the implications remain something to watch."
TSM Stock Called 'Favorite Long Idea'
TSMC's customers include top fabless semiconductor firms such as Apple, AMD, Broadcom, Nvidia and Qualcomm.
Elsewhere on Wall Street, Mizuho Securities trading-desk analyst Jordan Klein said concerns about the impact of TSMC's China trade restrictions are "overdone."
"This really feels like old news as reports last Friday said that (the) U.S. government had ordered TSMC to halt all AI-related chip shipments for China-based customers," he said in a client note.
Klein said he is seeing "some sell-side comments that the revenue impact is minimal for TSMC and much of TSMC's revenues for Chinese clients is non AI related."
Klein said TSM stock is one of his "favorite long ideas" along with Nvidia and Broadcom.
TSM stock is on three IBD lists: IBD 50, Global Leaders and Tech Leaders.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
