US May Fine TSMC $1 Billion Over Huawei AI Chip

TSMC Faces Potential Billion-Dollar Fine Over Huawei Chip Exports

Taiwan Semiconductor Manufacturing Company (TSMC) could be subject to a penalty exceeding $1 billion to settle a U.S. investigation concerning export controls. The investigation centers around a chip manufactured by TSMC that was reportedly utilized in a Huawei artificial intelligence processor, as detailed in a Reuters report.

Investigation Details and Company Response

Currently, TSMC has refrained from offering additional commentary, citing its adherence to a “quiet period,” as communicated by a company spokesperson to TechCrunch via email.

This situation initially surfaced in late 2024, involving TSMC, Huawei, and Xiamen Sophgo Technologies, a Chinese firm specializing in chip design. Sophgo operates as an affiliate of Bitmain, a prominent supplier of Bitcoin mining hardware, while TSMC holds the position of the world’s leading contract chip manufacturer.

Chip Supply Chain and Huawei's Ascend 910B

Initial reports suggested that a substantial number of TSMC’s AI chip dies, subject to export restrictions, were integrated into Huawei’s widely produced AI accelerator, the Ascend 910B AI processor.

The arrangement appears to be layered; it is alleged that TSMC’s chip is incorporated into Sophgo’s chip, which is then subsequently used in the Ascend 910B.

The significance of this extends beyond export regulations, as Huawei’s multi-chip processor is regarded as the most sophisticated of its kind manufactured within China. Estimates indicate that hundreds of thousands of these processors were created utilizing these components.

TSMC's Commitment to Compliance

TSMC affirmed its commitment to legal compliance in a public statement, declaring, “TSMC is a law-abiding company and we are committed to complying with all applicable rules and regulations, including applicable export controls.”

The company further stated that it has not supplied Huawei since mid-September 2020, in accordance with regulatory requirements. Should any potential issues arise, TSMC pledges to take swift action to ensure adherence to regulations, including conducting thorough investigations and proactively communicating with relevant stakeholders, such as customers and regulatory bodies.

TSMC confirmed proactive communication with the U.S. Commerce Department regarding this matter and continues to offer its full support to the ongoing investigation.

A Chronological Overview of TSMC’s Chip Deliveries to Chinese Companies

October 2024

According to Reuters, a technical analysis conducted by TechInsights, a research company based in Ottawa, Canada, revealed a TSMC-manufactured chipset within Huawei’s 910B AI processor.

This chipset demonstrated similarities to designs produced by Sophgo. Sophgo publicly stated that the investigation initiated by the U.S. Commerce Department regarding potential links between TSMC and Huawei does not encompass Sophgo or its products.

Furthermore, Sophgo asserted it has maintained no commercial relationships, either directly or indirectly, with Huawei.

November 2024

The U.S. Department of Commerce issued a directive to TSMC, mandating a cessation of advanced chip shipments to clients located in China, notably including Sophgo.

December 2024

Officials within the U.S. Commerce Department evaluated the possibility of including Sophgo on the U.S. export control blacklist.

January 2025

Subsequently, the U.S. government added more than 20 Chinese entities to the blacklist.

Among those added were Zhipu AI, a company focused on the creation of large language models, and Sophgo.