Taiwan Semiconductor Manufacturing Company (TSMC) may have to pay a fine of $1 billion or more to resolve a U.S. export control investigation related to a chip it made that was used in a Huawei AI processor, according to a report by Reuters.
TSMC did not provide any further comments as it is now “in [a] quiet period,” a spokesperson for the chipmaker said in an emailed statement to TechCrunch.
It’s the latest development in a situation that first came to light in late 2024 involving TSMC, Huawei, and Xiamen Sophgo Technologies, a Chinese chip designer. Sophgo is an affiliate of Bitmain, a Bitcoin mining equipment supplier, and TSMC is the world’s biggest contract chipmaker.
Reports at the time indicated that a significant quantity of TSMC’s export-controlled AI chip dies went into Huawei‘s mass-produced AI accelerator, the Ascend 910B AI processor.
In nesting-doll fashion, it’s alleged that TSMC’s chip is built into Sophgo’s chip, and Sophgo’s chip is subsequently built into the Ascend 901B.
This is important not just because of export rules but because Huawei’s multi-chip processor is considered the most advanced in its class to be made in China. It’s estimated that hundreds of thousands of these processors were produced with these components.
“TSMC is a law-abiding company and we are committed to complying with all applicable rules and regulations, including applicable export controls,” TSMC said in a statement. “In compliance with the regulatory requirements, TSMC has not supplied to Huawei since mid-September 2020. If we have any reason to believe there are potential issues, we will take prompt action to ensure compliance, including conducting investigations and proactively communicating with relevant parties, including customers and regulatory authorities, as necessary. We proactively communicated with the U.S. Commerce Department regarding the matter in the report and continue to support.”
A timeline of TSMC’s chip shipments to Chinese firms
October 2024
TechInsights, a tech research firm in Ottawa, Canada, disassembled Huawei’s 910B AI processor and discovered a TSMC-based chipset inside, per Reuters. The chipset resembled one made by Sophgo. Sophgo claimed that the U.S. Commerce Department’s investigation into potential connections between TSMC and Huawei does not involve Sophgo or its product. Sophgo has never had any direct or indirect business dealings with Huawei, it added.
November 2024
The U.S. Department of Commerce ordered TSMC to halt shipments of advanced chips to Chinese customers, which included Sophgo.
December 2024
The U.S. Commerce Department considered adding Sophgo to the U.S. blacklist.
January 2025
The U.S. then added over 20 Chinese companies, including Zhipu AI, which specializes in developing large language models, and Sophgo.