TSMC Possible $1 Billion Fine for Supplying Chips to Huawei

Taiwan Semiconductor Manufacturing Co. — a key player in the global semiconductor market — finds itself embroiled in a controversy involving US export controls. Sources suggest that the world’s largest contract chip manufacturer may face fines exceeding $1 billion, due to supplying chips that were used in Huawei’s AI processor, violating existing restrictions.

Reports indicate that the US Department of Commerce is investigating the transfer of technology to the Chinese company Sophgo. Particularly concerning is the chip manufactured by TSMC, which was integrated into Huawei’s high-performance AI processor, the Ascend 910B.

Huawei Saga: A New Turn in Tensions

This incident serves as another example of escalating tensions between American regulators and Chinese tech giants. Since the tightening of export regulations in October 2022, companies using US technology or equipment must obtain licenses to work with Huawei and other firms listed on the US «blacklist.»

TSMC, which incorporates American technology in its manufacturing processes, had previously refused partnerships with Chinese counterparts to comply with regulatory requirements. However, the current scenario raises questions about the effectiveness of these control measures.

Creating Risks for the Tech Industry

Below are key factors highlighting why the TSMC-Huawei incident evokes such a strong reaction:

• Escalation of Geopolitical Conflicts: The transfer of technology to China intersects directly with the technological cold war between the US and China. Accusations against TSMC might be viewed by Washington as a challenge to existing laws.
• Economic Consequences: A fine amounting to more than $1 billion could impact TSMC’s financial stability. This action sets a precedent for further pressure on other companies in the sector.
• Innovative Constraints: This incident complicates China’s access to modern chips necessary for AI development and high-tech industries.

Potential Outcomes for TSMC and the Market

Despite remaining technological leader, potential sanctions could affect TSMC’s operational activities, including:

1. Increased expenses related to complying with new export control requirements;
2. Risk of losing access to Chinese markets, creating a gap in orders;
3. Intensified competition from rivals like Samsung and Intel.

Moreover, punitive measures will create additional barriers to TSMC’s expansion in the global market.

Interesting Aspects of the US Department of Commerce Process

1. Legal decisions regarding such violations are made after extensive checks, allowing time for potential conflict resolution.
2. The chip involved in the controversy was used in a processor designed for precision calculations in AI training tasks, highlighting its strategic importance.

Conclusions and Predictions

Potential sanctions against TSMC will be a landmark event for the global tech industry. If the US insists on tough measures, it would increase pressure on companies working with China, forcing them to reconsider their strategies.

The semiconductor market remains a battleground for technological supremacy, and the TSMC incident serves as a reminder that each new problem has far-reaching consequences.

Market attention to the development of this conflict will undoubtedly intensify. TSMC’s ability to avoid a devastating blow will be a testament to the company’s resilience against threats from regulatory bodies.