The world’s biggest contract chipmaker, Taiwan Semiconductor Manufacturing Co., has reportedly ceased accepting new orders from Huawei Technologies, according to the Nikkei Asian Review.

TSMC did not confirm the details and told Reuters that the reports were “purely market rumor.”

TSMC’s decision comes on the heels of a May 15 announcement of the U.S. government’s new plans to restrict “Huawei’s ability to use U.S. technology and software to design and manufacture its semiconductors abroad.” According to the U.S. Department of Commerce, Huawei and 68 of its non-U.S. affiliates “pose a significant risk of involvement in activities contrary to the national security or foreign policy interests of the United States.”

Reuters reported that TSMC plans to build a US$12 billion factory in Arizona, which “generated goodwill” at the U.S. Commerce Department.

TSMC is considered as Huawei’s “lifeline” as the manufacturer provides the main source of chips for Huawei’s smartphones and 5G technologies. Huawei, the second biggest client of TSMC after Apple, accounts for more than 15 percent of TSMC’s revenue.

Huawei responded to the U.S. restrictions in a media statement on Monday and said its business will “inevitably be affected.

“The U.S. is leveraging its own technological strengths to crush companies outside its own borders. This will only serve to undermine the trust international companies place in U.S. technology and supply chains. Ultimately, this will harm U.S. interests,” the Huawei statement read.

Nikkei reported that the current orders already in production would not be affected by TSMC’s new policy.

Industry analysts in Taiwan are worried that the U.S. sanctions against Huawei might impact TSMC’s operations and sales.

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TNL Editor: Daphne K. Lee, Nicholas Haggerty (@thenewslensintl)

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