As the global artificial intelligence (AI) race presses on amid a US-China trade war, the Taiwan Semiconductor Manufacturing Company (TSMC)—a $514 billion titan that manufactures most of the world's AI chips—is warning that it may not be possible to keep its customers' most advanced technology out of China's hands.

US export controls require chipmakers to monitor shipments and know their customers to restrict China's access to AI chips. But in a recently published 2024 report , TSMC confirmed that its "role in the semiconductor supply chain inherently limits its visibility and information available to it regarding the downstream use or user of final products that incorporate semiconductors manufactured by it."

Essentially, TSMC expects that it plays too big a role in the semiconductor industry to stop all the possible unintended end-uses of the semiconductors it manufactures. Similarly, it appears impossible to track all the third parties determined to skirt sanctions. And if TSMC's hands are truly tied, that ultimately means that the US can't effectively stop the latest AI tech from trickling into China.

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The semiconductor industry is bracing to potentially lose more than $1 billion once Donald Trump announces chip tariffs.

Two sources familiar with discussions between chipmakers and lawmakers last week told Reuters that Applied Materials, Lam Research, and KLA—three of the largest US chip equipment makers—could each lose about "$350 million over a year related to the tariffs." That adds up to likely more than $1 billion in losses between the three, and smaller firms will likely face similarly spiked costs, estimating losses in the tens of millions.

Some chipmakers are already feeling the pain of Trump's trade war, despite a 90-day pause on reciprocal tariffs and a tenuous exception for semiconductors and other electronics.

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