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Following the U.S. Commerce Department’s late 2024 investigation into whether TSMC produced AI chips for Huawei, the latest development suggests the foundry giant could face a penalty exceeding $1 billion, as per Reuters.
The report suggests that the probe is linked to a chip TSMC produced for China-based Sophgo, which matches one found in Huawei’s advanced AI processor, the Ascend 910B, triggering concerns over potential violations.
According to sources cited by Reuters, the potential $1 billion+ penalty stems from U.S. export rules, which allow fines of up to twice the value of unauthorized transactions.
Analysts reportedly point out that TSMC produced nearly 3 million chips matching designs ordered by China’s Sophgo—chips that likely ended up in Huawei’s hands.
Since TSMC uses U.S.-origin technology in its manufacturing, it cannot legally make chips for Huawei or certain advanced chips for Chinese clients without a U.S. license.
The timing is somehow sensitive, as Trump aims to impose new 32% reciprocal tariffs on Taiwan on April 9. Though chips are currently exempted, Washington has hinted that semiconductors could be next.
Even before the investigation wraps up, TSMC has pledged a fresh $100 billion investment in the U.S., including five new chip fabs. Meanwhile, Bloomberg reports that TSMC and Intel have tentatively signed a joint venture deal—a major milestone in a long-anticipated move that’s had investors on the edge of their seats.
According to Reuters, TSMC spokesperson Nina Kao said the company remains fully committed to following the law, stressing that TSMC hasn’t supplied chips to Huawei since mid-September 2020. She added that the firm is actively cooperating with the U.S. Commerce Department.
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(Photo credit: TSMC)
