TSMC may encounter $1 billion penalty over Huawei chip controversy

Huawei-TSMC chip war has reached a new chapter, where the latter might face a $1 billion penalty. Following months of investigation, the U.S. may force the Taiwanese firm to pay a fine for illegally supplying AI chips to Chinese companies.

Reuters reported that TSMC has been producing AI chips for a Chinese firm named Sophgo. One of these SoCs was found in the Ascend 910B, raising security concerns.

After investigating the matter for months, TSMC expected to face over a $1 billion penalty for the Huawei chip controversy. Inputs reveal the US may charge the fine of up to twice the value of unauthorized transactions that breach export rules.

Some analysts reportedly said that TSMC has manufactured nearly 3 million chips matching the designs with the one ordered by Sophgo, and eventually ended in Huawei’s AI products.

Since the Taiwanese firm uses U.S. tech-based chipmaking tools, supplying chips to any Chinese customer requires a US license. Simply put, it cannot produce advanced processors for sanctioned Chinese companies, violating trade regulations.

Analyst says:

Lennart Heim – a researcher at RAND’s Technology and Security and Policy Center in Virginia, says that TSMC should not have made AI-based chips for Chinese companies as they could have been linked to banned companies like Huawei.

The news has emerged at a sensitive moment when Trump is planning to impose 32% reciprocal tariffs on Taiwan. Even though the chips don’t count in this tariff section, the U.S. authorities hinted it could soon add processors on the list.

Nina Kao, a TSMC spokesperson, stated that the company has complied with the laws and hasn’t supplied any chips to Huawei since September 2020. The firm will continue to cooperate with the authorities on the chip matter probe.

On the other hand, the Taiwan Economy Minister Kuo Jyh-huei said that TSMC or the ministry hasn’t received any notification related to a possible fine. Last month, however, US Commerce Secretary Howard Lutnick said:

“We are going to seek in this administration a dramatic increase in enforcement and fines for people who break the rules. We have had enough of people trying to make a dollar supporting the people who seek to destroy our way of life.”

TSMC may encounter $1 billion penalty over Huawei chip controversy (Image Credits: TSMC)

(source)