Taiwan Semiconductor Manufacturing Co. is increasing production of advanced artificial intelligence chips for Nvidia, even as U.S. export restrictions on high-end semiconductors continue to tighten, according to sources familiar with the matter. The move underscores how demand for AI hardware remains strong despite rising policy pressure on the global chip supply chain.

The accelerated output comes at a sensitive moment for the industry. Washington has expanded controls aimed at limiting access to the most advanced chips and related technology, particularly those with possible military or strategic applications. That has forced manufacturers and customers to adjust sourcing plans while trying to keep pace with surging demand from data centers and AI developers.

TSMC, the world’s largest contract chipmaker, remains a central supplier for Nvidia’s latest processors. Any increase in production capacity could help Nvidia meet customer demand, but it also highlights the growing tension between commercial growth in AI and the geopolitical fight over semiconductor technology.

The Reuters report did not say the production shift violated export rules, and the exact scale of the ramp-up was not disclosed. Still, the development reflects how major tech firms are adapting to a more restrictive trade environment that continues to reshape the global semiconductor market.