Taiwan Semiconductor Manufacturing Company (TSMC) could pay a fine of $1 billion or more in a U.S. Department of Commerce export control investigation. The case involves chips TSMC made for Chinese firm Sophgo that ended up in Huawei’s Ascend 910B AI processor.
The Export Control Issue
TSMC halted direct shipments to Huawei in September 2020 following U.S. export restrictions. However, the Commerce Department is examining whether chips TSMC manufactured for Sophgo, a Chinese chip designer linked to cryptocurrency mining hardware company Bitmain, were later transferred to Huawei.
“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. “We have not supplied to Huawei since mid-September 2020.”
Production Volume and Penalties
Lennart Heim, researcher at RAND’s Technology and Security and Policy Center, reported TSMC produced nearly three million chips matching Sophgo’s design that likely went to Huawei.
The potential $1 billion penalty comes from U.S. regulations allowing fines up to twice the value of transactions that violate export rules. For comparison, Seagate paid a $300 million fine in 2023 for sending $1.1 billion worth of hard drives to Huawei.
Supply Chain Complexity
The case shows how difficult monitoring modern technology supply chains can be. When TSMC receives a design to manufacture, identifying the original developer and final user presents challenges.
Heim pointed out that the AI-focused design should have raised red flags: “TSMC should not have made the chip for a company headquartered in China, especially given the risk that it could be diverted to a restricted entity like Huawei.”
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Discovery Timeline
Canadian tech research firm TechInsights uncovered the connection in October 2024 when they disassembled Huawei’s 910B AI processor and found a TSMC-made chipset resembling one from Sophgo.
According to The Register’s report, TSMC identified concerns about Sophgo’s orders when they resembled Huawei’s AI accelerator designs. The company is cooperating with U.S. authorities on the investigation and has suspended shipments to Sophgo after the issue came to light.
U.S.-Taiwan Relations
This investigation comes at a critical moment. TSMC recently announced a new $100 billion U.S. investment plan for five additional chip facilities. Meanwhile, the U.S. imposed a 32% tariff on certain Taiwanese imports (though semiconductors are currently excluded).
Taiwan’s Economy Minister Kuo Jyh-huei stated TSMC “is a company that respects laws and regulations” and confirmed his ministry hasn’t received notice about any potential fine.
Stricter Enforcement
The case reflects intensified U.S. export control enforcement. Commerce Secretary Howard Lutnick stated: “We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives. We are committed to using every tool at the Department’s disposal to ensure our most advanced technologies stay out of the hands of those who seek to harm Americans.”
The Processor Specifications
Huawei’s Ascend 910B delivers 320 teraFLOPS of FP16 performance, comparable to a five-year-old Nvidia A100. Industry experts consider it the most advanced AI processor made in China. Multiple sources indicate significant production volume, though the exact number is not conclusively established.
As of April 12, 2025, the investigation continues with no official charges or fines announced against TSMC.
