Billion-Dollar Chip Scandal: TSMC Faces U.S. Export Control Penalty

Taiwan Semiconductor Manufacturing Company (TSMC) is under U.S. investigation for potentially violating export controls. The inquiry focuses on TSMC's production of chips for Sophgo, a design company with ties to Huawei. The chips were reportedly used in Huawei's AI processors, risking a significant penalty exceeding $1 billion.

Taiwan Semiconductor Manufacturing Company (TSMC) could be penalized over $1 billion for allegedly breaching U.S. export controls. Two anonymous sources have confirmed the U.S. Department of Commerce's investigation into the chipmaker's role in producing chips for China-based Sophgo, closely linked to Huawei's AI processors.

TSMC, the world's leading contract chipmaker, is scrutinized for possibly supplying chips that align with those in Huawei's advanced Ascend 910B AI processor. This move comes amidst the restricted list implicating Huawei, a significant player in China's AI chip sector, indicating sanctions violations.

The case unfolds amidst strengthening U.S.-Taiwan trade relations, which recently faced heightened tariffs. While TSMC plans U.S. investments, the current chip export controversy might impact negotiations. Commerce Department officials stress enforcement, and industry observers note TSMC's cooperation since halting relevant shipments last year.

(With inputs from agencies.)