US lawmakers urge tighter rules on contract chipmakers supply

A bipartisan pair of U.S. senators on Monday urged President Donald Trump's administration to tighten rules on chip contract manufacturers such as Taiwan Semiconductor Manufacturing Co to prevent them from making advanced AI chips for overseas subsidiaries of Chinese companies.



This comes after the Trump administration last week moved to halt a potential loophole that may have led companies to export advanced chips such as those made by Nvidia to subsidiaries of Chinese companies located outside China.



That potential loophole arose last year when the Trump administration announced it would not enforce rules put in place by the previous Biden administration governing global access to U.S. chips.



The Bureau of Industry and Security (BIS), the arm of the U.S. Commerce Department that oversees export control laws, has clarified that sales to Chinese company subsidiaries in third countries such as Malaysia require a license.



But experts such as former State Department official Chris McGuire said last week that the guidance still did not address another potential loophole, under which front companies for Chinese firms could order custom chips to be made by chip contract manufacturers such as TSMC.