The latest effort to curb exports of critical technologies comes after reports that a TSMC product was found inside a Huawei AI chip.

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

The US order comes just weeks after TSMC notified 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 Taiwan Affairs Office said on Wednesday that a U.S. order to Taiwan Semiconductor Manufacturing Co to halt shipments of advanced chips to Chinese customers undermines the interests of Taiwanese companies and raises tension across the Taiwan Strait.

A wider shipment ban on TSMC-made chips could affect a range of mainland businesses from electric vehicles to smartphones.

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.