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Summary: It appears that TSMC could face a fine to the tune of 1 billion dollars. This may be a penalty the company has to pay for indirectly supplying Huawei with an AI chip that found its way into one of Huawei’s chipsets.
Uh-oh. TSMC could be facing a 1 billion dollar fine. A report from Reuters cites anonymous sources who claim that the US Department of Commerce could issue TSMC a whopping $1 billion fine for allegedly providing chips to a Chinese company that eventually ended up in Huawei’s devices.
TSMC indirectly supplied Huawei with chips
You see, Huawei is currently on the US Entity List. What does this mean? This means that the company is barred from doing business with American companies. It also bans American companies from doing business with it. It goes even further. Even non-American companies cannot do business with Huawei as long as it uses technologies from the US.
In this case, TSMC didn’t actually make the chip for Huawei. It made a chip for a company called Sophgo. However, the AI chip later made its way into the Huawei Ascend 910B chipset. This is how TSMC found itself in a pickle.
The US Department of Commerce has been investigating TSMC for a while now. Back in 2024, TSMC denied it did business with Huawei and issued a statement saying, “If we have any reason to believe there are potential issues, we will take prompt action to ensure compliance, including conducting investigations and proactively communicating with relevant parties including customers and regulatory authorities as necessary.”
Huawei’s semiconductor ambitions
Before the US placed Huawei on the Entity List, the company was on track to potentially overthrow Apple and Samsung in the smartphone market — but that move stopped its ambitions dead in their tracks.
Also, following the ban, Huawei has been struggling to try and create chipsets that are on par with those made by companies like Qualcomm. However, in 2024, Huawei surprised everyone with a new phone with a 7nm chipset.
Given the restrictions in place, Huawei and SMIC surprised many by managing to pull this off. In fact, SMIC is expected to produce its first 5nm chipset later this year, which could also find its way into a Huawei phone.
Chinese companies have been trying to figure out a way around the ban and using alternate forms of technology. Some are also exploring developing their own EUV machines. This is key considering that the Dutch firm ASML isn’t planning on supplying China with its machines.