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## The Impact of US Sanctions on Huawei and China's Semiconductor Industry

The recent US election results have ushered in a new wave of sanctions against Chinese tech giant Huawei, further disrupting the country's semiconductor industry. The latest move by Taiwan Semiconductor Manufacturing Company (TSMC) to halt its supply of advanced 7-nanometer AI chips to China has hit the industry where it hurts most.

### TSMC's Chip Supply Cuts and the Implications

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TSMC, the world's leading chip manufacturer, previously provided Huawei with an earlier generation of chips. However, the company has now canceled orders from a Chinese company that was remarkably similar to Huawei's AI chip, the Ascend 910B. This decision, made in collaboration with the US Department of Commerce, has put the Chinese company's large advanced payment at risk.

The impact extends beyond Huawei, as other Chinese chip design companies have also received notifications from TSMC that they can no longer produce 7-nanometer or smaller AI chips for them. Samsung has also informed its Chinese clients that it will no longer provide 7-nanometer and advanced chips.

### Huawei's Survival Challenges

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Huawei has faced numerous sanctions in the past, but has managed to turn each challenge into a patriotic campaign, elevating the survival challenge into a symbol of national pride. However, without TSMC's reliable supply, the company's ability to maintain high-quality, high-performance chips is in question.

Huawei claims to pursue self-reliance and speed up domestic chip manufacturing, but building an entire chip production chain, especially under international embargoes, is no small feat. China's domestic chip industry, including manufacturers like SMIC, is still lagging in terms of production quality and yield, making it difficult for Huawei to compete in the high-end market.

### The Broader Impact on China's Semiconductor Industry

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The TSMC suspension of chip production for China goes beyond a supply issue; it disrupts the country's entire semiconductor industry. The US has been restricting China's access to critical technologies, and TSMC's role as a leading manufacturer has made it a strategic asset for the US.

The impact of these sanctions is already being felt, with over 22,000 chip firms going out of business in the past 5 years. Experts blame US sanctions and economic downturns for these closures, and Chinese leaders are reportedly frustrated with the failure to produce domestic alternatives to US semiconductors.

### Potential Workarounds and Future Prospects

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While the US has imposed extensive sanctions, industry analysts suggest that China may find ways to circumvent the restrictions, potentially resorting to tactics like recruitment and leveraging loopholes. In the past, China has actively pursued Western technology and business secrets through cyber attacks, espionage, and other means.

However, the US is taking steps to counter and guard against China, and with Trump's re-election, many speculate that US restrictions on China will intensify and expand. The future of China's semiconductor industry remains uncertain, as the country faces significant challenges in developing domestic alternatives to the high-end chips it has relied on from the global market.