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The Taiwan Semiconductor Manufacturing Company (TSMC) has assured that it is committed to complying with all regulations that prohibit it from selling chips to and having business dealings with Chinese technology giant Huawei. Huawei is forbidden by US law to acquire high end chips that are manufactured using US origin technologies, and TSMC's comments came in response to a report that claimed that the firm was being investigated by the US for having ties to Huawei. The purported investigation is being headed by the Commerce Department, and it covers TSMC's artificial intelligence and smartphone chips.
TSMC Assures It Will Take Quick Action To Resolve Any Issues That Might Stem From Potential Lack Of Compliance After Investigation
TSMC's statement comes after a paywalled report in The Information which had claimed that the Commerce Department was investigating TSMC for having supplied Huawei with chips used in either smartphones or artificial intelligence systems. Huawei's smartphone chips have been heavily scrutinized since US sanctions in 2020 stopped TSMC from selling the most advanced products to the company.
For instance, TSMC cannot sell chips made through 7 nanometer or lower process technology nodes to Huawei, and with Huawei's competitors such as Apple now using 3 nanometer chips in their smartphones, the restrictions have dealt a sizable competitive blow to the firm due to its work with the Chinese government.
The rise of AI has further increased the scrutiny of advanced processor shipments worldwide. These have led to NVIDIA facing US restrictions for selling some products to Huawei, and they have also increased China's efforts to develop its local AI ecosystem to reduce reliance on Western technology.
In response, TSMC has stressed that it "is a law abiding company," adding that "we are committed to complying with all applicable regulations." TSMC states that if is has "any reason to believe there are issues, we will take prompt action to ensure compliance."
With the surging demand for AI processors helping TSMC to recover from a slump in the consumer electronics industry, any violations of US law could create complications for the global semiconductor industry. Since TSMC supplies most of the chips made on order worldwide, legal and regulatory complications might restrict its access to advanced chip manufacturing equipment.
This in turn could force firms to diversify their chip manufacturing supply chains. TSMC's sizable presence in Taiwan and the region's geopolitical tussles with China have also created unease in chip companies about the threat of supply chain disruption in case of conflict in the South China Sea. NVIDIA's CEO Jensen Huang remarked last month that his firm's chip design capabilities allow it to shift away from TSMC in the worst case scenario since NVIDIA designs "diversity and redundancy into every aspect wherever we can. And then the last part of it, is, to have enough intellectual property in our company in the event that we have to shift from one fab to another, we have the ability to do it."
TAIWAN SEMI $TSM RESPONSE:
“TSMC IS A LAW-ABIDING COMPANY AND WE ARE COMMITTED TO COMPLYING WITH ALL APPLICABLE REGULATIONS.
IF WE HAVE ANY REASON TO BELIEVE THERE ARE ISSUES, WE WILL TAKE PROMPT ACTION TO ENSURE COMPLIANCE.” https://t.co/H3oGDj0D6w
— Stock Talk (@stocktalkweekly) October 18, 2024
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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