Taiwan Semiconductor Manufacturing Company (TSMC) faces a potential fine exceeding $1 billion from the U.S. government due to allegations involving export control violations. According to investigative reports, the fine stems from a U.S. inquiry into a chip produced by TSMC that eventually ended up in a Huawei artificial intelligence processor, breaching export restrictions.
The scrutiny emerged late last year following revelations linking Huawei with Xiamen Sophgo Technologies, a Chinese chip design firm. Sophgo, an affiliate connected to Bitmain, is believed to have embedded TSMC-supplied chips within its own components, which were subsequently integrated into Huawei’s Ascend 910B AI accelerators. These sophisticated processors represent some of the most advanced chips currently made in China, with critics drawing particular attention to the possible implications for tech competition and national security.
TSMC, the world’s largest contract semiconductor manufacturer, has refrained from offering detailed commentary, citing its current “quiet period.” In a formal statement, the company insisted it has complied fully with export regulations and emphasized that it stopped supplying Huawei entirely as of mid-September 2020. “TSMC is a law-abiding company and committed to complying with all applicable laws and regulations,” the statement read. “If we have reason to suspect any potential issues, we proactively take action, conduct thorough investigations, and communicate promptly with all necessary parties, including relevant regulatory agencies.”
The issue first gained attention in October 2024, when independent technology research firm TechInsights uncovered evidence that Huawei’s 910B AI processor contained chip dies originating from TSMC, resembling products associated with Sophgo. Sophgo has publicly denied any direct or indirect dealings with Huawei, declaring it was not targeted by the investigation at that point.
In November 2024, responding to mounting concerns, the U.S. Commerce Department ordered TSMC to immediately halt shipments of advanced semiconductor products to Chinese firms, notably affecting Sophgo. By December, reports surfaced that U.S. authorities were contemplating the addition of Sophgo itself to the export blacklist alongside other targeted Chinese enterprises.
In January 2025, Washington officially blacklisted approximately twenty Chinese tech firms, including prominent AI developers such as Zhipu AI, as well as Sophgo, further tightening restrictions and escalating trade tensions between the two global superpowers.
This substantial fine announced against TSMC represents the latest move by the U.S. government to enforce its export control regime aimed at curbing China’s technological advancements in artificial intelligence and other strategic sectors. The outcome of this investigation could significantly impact TSMC’s business dealings and broader U.S.-China technological relations moving forward.
