TSMC Faces $1 Billion Penalty for Alleged Export Control Breach

Taiwan Semiconductor Manufacturing (TSMC) could face a $1 billion penalty for allegedly violating U.S. export controls. The chipmaker produced a chip that ended up in Huawei's AI processor, raising concerns. As the U.S.-Taiwan relationship is renegotiated, TSMC is committed to legal compliance and is cooperating with investigations.

Taiwan Semiconductor Manufacturing Company (TSMC) is under investigation by the U.S. Department of Commerce for allegedly violating export control laws. The company, known as the world's largest contract chipmaker, is potentially facing a massive penalty of $1 billion or more. Sources familiar with the matter revealed that this investigation involves a chip made for China-based Sophgo, which was subsequently found in Huawei's advanced AI processor, Ascend 910B. Both companies are on a U.S. trade list that restricts the receipt of goods incorporating U.S. technology.

The complex geopolitical landscape adds tension as the U.S. and Taiwan renegotiate trade terms. The investigations coincide with a period of heightened scrutiny on Chinese advancements in artificial intelligence and the enforcement of strict export regulations. Despite the controversy, TSMC remains steadfast in its commitment to adhering to international law. The company clarified it has not engaged with Huawei since mid-September 2020, emphasizing cooperation with ongoing probes.

This development emerges amidst a time of intense focus on export control enforcement from U.S. authorities. Commerce Secretary Howard Lutnick has emphasized the need for increased penalties for regulatory violations. As TSMC prepares for potentially stiff sanctions, the case brings into sharp focus the broader strategic enforcement efforts targeted at curbing technology transfers to Chinese organizations. The situation remains unfolding, with no formal actions taken against TSMC yet.

(With inputs from agencies.)