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 has refrained from providing additional remarks since they have entered "the quiet period," stated a representative of the semiconductor company in an email sent to Massima.
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 global leader in contract chip manufacturing.
Reports as indicated at the time, a substantial number of TSMC’s export-restricted AI chip die were involved went into Huawei "s mass-produced AI processor, the Ascend 910B AI processor .
Allegedly structured like nesting dolls, TSMC’s chip is incorporated into Sophgo’s chip, which is then integrated into the Ascend 901B.
This significance stems from factors beyond mere export regulations; Huawei’s multi-chip processor stands out as the most sophisticated within its category manufactured domestically in China. Reports suggest that hundreds of thousands of such processors have been fabricated using 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 chronology of TSMC’s semiconductor deliveries to companies in China
October 2024
TechInsights , a technology research company based in Ottawa, Canada, dismantled Huawei’s 910B AI chip and found a TSMC-made component within it. per Reuters The chipset was similar to those produced by 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 instructed TSMC to stop deliveries Of sophisticated chipsets to clients in China, including Sophgo.
December 2024
The U.S. Commerce Department thought about including Sophgo on the U.S. blacklist .
January 2025
The U.S. then added over twenty Chinese companies Including Zhipu AI, which focuses on creating large language models, and Sophgo.