Taiwan Semiconductor Manufacturing Company (TSMC) will suspend production of advanced AI chips for Chinese companies, specifically those at 7 nanometers or smaller, starting next Monday.

TSMC's decision is influenced by the need to improve internal controls and anticipated US export controls on chip supplies to China.

The US has implemented export controls to prevent chipmakers using US technology from supplying advanced AI processors to China.

TSMC's new policy could impact Chinese tech companies like Alibaba and Baidu, which rely on TSMC for manufacturing their AI chips.

TSMC's October revenue increased by 29.2% to NT$314 billion ($9.8 billion), despite the new restrictions.