TAIPEI (Taiwan News) — The US Commerce Department may impose a fine of NT$33.2 billion (US$1 billion) or more on TSMC for allegedly circumventing a ban on selling its chips to Huawei.
Citing two sources familiar with the matter, Reuters reported there is an ongoing US Commerce Department investigation into the appearance of its chips in Huawei’s AI processors. Sources said the department has been investigating how TSMC-made chips manufactured for Chinese chip design company Sophgo, ended up in Huawei devices.
One source indicated the fine could exceed US$1 billion because US export control regulations allow for penalties of up to twice the value of the unlawful transaction.
Lennart Heim, a researcher at the RAND Corporation’s Technology and Security Policy Center in Arlington, Virginia, said that as many as 3 million chips manufactured by TSMC match Sophgo’s designs and likely ended up in Huawei products.
Heim pointed out that because these chips were designed for AI applications, TSMC should not have supplied them to companies headquartered in China.
TSMC Spokesperson Nina Kao said the company has always complied with regulations and ceased all shipments to Huawei from mid-September 2020. Kao added that the firm is cooperating with the department’s investigation.
While no formal action has yet been taken against TSMC, the process usually involves sending a proposed charging letter to the company. Such a letter outlines alleged violations, transaction amounts, and proposed civil penalties, and gives the company 30 days to respond.
TSMC became a focus of attention last fall when Canadian tech research firm TechInsights dismantled Huawei’s Ascend 910B processor and found a TSMC-manufactured chip inside.
In response, TSMC suspended shipments to Sophgo. Reuters previously reported that in November, the Commerce Department instructed TSMC to stop supplying Chinese customers with advanced 7nm or more cutting-edge chips that could be used in AI applications.
Although Sophgo denied having any business ties with Huawei in October, it was added to the same US export blacklist as Huawei in January.
