Earlier last week, the US Commerce Department launched a probe into TSMC, the Taiwanese semiconductor giant. The federal department accused TSMC of violating the country’s export control rules by supplying chips to the Chinese smartphone manufacturer Huawei.
Shortly after, the Canadian technology research firm TechInsights took apart Huawei’s Ascend 910B processor, only to find TSMC’s technology on the product. Following this, TSMC, a company that relies on American tech giants like Apple and Nvidia for a majority of its revenue, informed the US federal agencies about the matter.
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TSMC Manufacturer Semiconductors For Sophgo, Which Ended Up On The Ascend 910B Processor
Upon further investigation, TSMC found that the chips (and the technology) it designed for the Chinese firm Sophgo ended up on Huawei’s Ascend 910B processor. This is where things take an interesting turn, as Sophgo says that it has never engaged in business or any other kind of relationship with Huawei.
Even though Sophgo has submitted a detailed report to TSMC, the latter has suspended all shipments to the former. Why does it matter, you ask? Well, Huawei has been under sanctions for a few years now, implying that no company in the US can trade with the company in any capacity without permission from the government.
Apple And Nvidia Are TSMC’s Biggest Customers
This puts TSMC in a tricky spot, as it has, albiet unknowingly (as it seems at the moment), supplied its cutting-edge technology to Huawei. In the process, Sophgo acted as a proxy for the Chinese smartphone manufacturer. Although Huawei used to be one of the biggest customers of TSMC, the sanctions ended their relationship.
At the moment, TSMC plays a key role in the progress of American tech giants like Apple, which uses the former 3nm fabrication technology on the iPhone 16 (review) series. The popular graphics card manufacturer Nvidia also relies on TSMC for cutting-edge semiconductors. In September, reports about OpenAI using the chip maker’s A16 process to manufacture its AI chip also surfaced.
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Given that the company has such clients in the US, violating the export control policies could result in severe consequences. The incident also raises questions about TSMC’s customer screening process. The US federal department would surely make some strong comments or suggestions about the same to avoid such occurrences.
For now, TSMC has informed both the US and Taiwanese authorities about the matter. The company needs to abide by all the rules set forth by the federal departments to carry out business with the companies in the region. Further, it is the leading contributor to America’s ambition of becoming the global leader in semiconductor technology.
Let’s see how the investigation pans out over the coming days, especially as the US responds to it.
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