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Arthur T Knackerbracket has processed the following story:

A US order to TSMC to cut AI chip supplies to China over Huawei sanctions won't cause problems for Apple. However, Taiwan's prohibition of TSMC producing 2-nanometer chips elsewhere could make an impact.

U.S. sanctions against Huawei has caused problems for TSMC over attempts by intermediaries to order certain AI-based chip designs on Huawei's behalf. From Monday, TSMC is suspending shipments of the AI-focused chips to China, on the orders of the United States.

[...] The blocked shipments by the Department of Commerce certainly impacts TSMC's sales with Huawei, but it could also cause other problems.

[...] Lower production means it has to shift around its production line to maximize the utility of its facilities. For its relatively new Arizona production plant, its relatively low amount of production could make it a viable facility to temporarily mothball.

While largely risking the Arizona investment temporarily, the order probably won't do much to harm Apple's supplies from the company.

Apple relies on assembly partners in China to produce its products, including the iPhone, and TSMC's chips therefore need to be imported. As chips that have AI benefits in the form of the Neural Engine, this is the sort of chip that the Commerce Department is wary about handing over to Huawei.

However, with the exception of a small amount of A16 chips produced in the Arizona facility, the vast majority of its chips are made elsewhere, including in Taiwan.

While there is an intention for Apple chips to be made in the United States via TSMC's Arizona facility, it may not necessarily get to produce cutting-edge chips.

[...] "Since Taiwan has related regulations to protect its own technologies, TSMC cannot produce 2-nanometer chips overseas currently," Kuo told the Economics Committee in Taipei. "Although TSMC plans to make 2-nanometer chips [abroad] in the future, its core technology will stay in Taiwan."

[...] Under Taiwanese law, domestic chip manufacturers are allowed to produce chips elsewhere. The catch is that they must be at least one generation behind fabrication facilities operated in Taiwan.

TSMC currently plans to make 2-nanometer and more advanced chips at its Arizona facilities by 2030, according to the company's roadmap.

[...] Unless Taiwan changes its laws, TSMC will have to create and use even more advanced manufacturing processes to allow 2-nanometer chip production to start in the United States.

For Apple, this means it cannot take advantage of TSMC's newer chip processes for any chips made in the United States. Instead, it will have to rely on TSMC's slightly older tech for US-based production, while maintaining existing out-of-US manufacturing for the fastest, newest chips.

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