The Taiwan Semiconductor Manufacturing Company (TSMC) notified the US government in late October 2024 that a chip manufactured for a customer might have made its way to a restricted entity. TSMC cannot ship advanced chips manufactured on 16-nanometer or smaller manufacturing nodes to China's Huawei, and multiple reports have previously claimed that the firm is working with the US government on whether it inadvertently supplied a chip to Huawei. In October last year, reports claimed that the firm's chips had made it to Huawei, and in its statements at the time, TSMC had shared that it would take "prompt action" in case of any legal violations.
TSMC Confirms It Notified US & Taiwan Authorities About Chip Making It To A Restricted Entity
Huawei's Ascend AI chips have been the focus of considerable debate due to reports that their dies were manufactured by TSMC and shipped to the firm before the first Trump administration's sanctions against Huawei came into effect in 2020. In October last year, a media report claimed that a TSMC customer had placed orders for a chip similar to Huawei's Ascend 910B with the firm. According to the report, TSMC had promptly reported the development to the US government, and a mailed statement by the firm later shared that it was unaware of being investigated by the US government.
Another report from Reuters earlier this year claimed that TSMC was facing a $1 billion fine from the US government for manufacturing a chip that eventually became part of a Huawei AI processor. The report from Reuters claimed that TSMC made the chip for Chinese firm Sophgo, whose chip, made by TSMC, had been found inside Huawei's Ascend 910B AI chip.
Now, TSMC has confirmed in its annual report that it notified US and Taiwanese authorities in October last year about having potentially shipped a chip to a restricted entity. According to the firm:
"In October 2024, TSMC notified relevant US and Taiwan authorities that one type of its customer’s chip manufactured by it might have been diverted to a restricted entity or incorporated into a restricted entity’s product, and since then has been cooperating with the authorities’ requests for additional information and documents."
The firm goes on to add that it faces risks of activities being found non-compliant with US and other laws despite its best efforts. Like NVIDIA, TSMC deals with the constant risk of violating laws related to its products. Its annual report the firm outlines that it faces several risks such as being unable to procure machinery or raw materials for production if it was unable to keep up with the legal requirements.
TSMC adds that its role in the chip supply chain "limits" its visibility related to the "downstream use or user of final products that incorporate semiconductors manufactured by it." In supply chain management, downstream refers to the later stages of a product's journey from the manufacturer to the end user. The lack of visibility makes it difficult to ensure that chips are not "diverted to unintended end use or end-user, including potentially by its business partners, or by third parties with an intent of circumvention," according to the firm.
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
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