Exclusive-TSMC could face $1 billion or more fine from US probe, sources say

By Karen Freifeld

(Reuters) - Taiwan Semiconductor Manufacturing could look a punishment of $1 cardinal oregon much to settee a U.S. export power probe implicit a spot it made that ended up wrong a Huawei AI processor, according to 2 radical acquainted with the matter.

The U.S. Department of Commerce has been investigating the world's biggest declaration chipmaker's enactment for China-based Sophgo, the sources said. The plan company's TSMC-made spot matched 1 recovered successful Huawei's high-end Ascend 910B artificial quality processor, according to the people, who requested anonymity due to the fact that they were not authorized to talk publically astir the matter.

Huawei — a institution astatine the halfway of China's AI spot ambitions that has been accused of sanctions busting and commercialized concealed theft — is connected a U.S. commercialized database that restricts it from receiving goods made with U.S. technology.

TSMC made astir 3 cardinal chips successful caller years that matched the plan ordered by Sophgo and apt ended up with Huawei, according to Lennart Heim, a researcher astatine RAND's Technology and Security and Policy Center successful Arlington, Virginia, who is tracking Chinese developments successful AI.

The $1 billion-plus imaginable punishment comes from export power regulations allowing for a good of up to doubly the worth of transactions that interruption the rules, the sources said.

Because TSMC's chipmaking instrumentality includes U.S. technology, the company's Taiwan factories are wrong scope of U.S. export controls that forestall it from making chips for Huawei, oregon producing definite precocious chips for immoderate lawsuit successful China without a U.S. license.

Heim said that based connected the design, which is for AI applications, TSMC should not person made the spot for a institution headquartered successful China, particularly fixed the hazard that it could beryllium diverted to a restricted entity similar Huawei.

Penalizing TSMC comes astatine a captious infinitesimal for U.S.-Taiwan relations arsenic the 2 countries statesman re-negotiating their trading narration aft Trump past week slapped a 32% levy connected imports from Taipei. The tariffs exclude chips, but Trump has said his squad is looking astatine levies connected semiconductors.

In March, TSMC said astatine the White House that it plans to marque a caller $100 cardinal concern successful the United States that includes gathering 5 further spot facilities successful coming years.

Reuters could not find however the Trump medication volition proceed with TSMC oregon erstwhile the substance would beryllium resolved. Top officials person said they program to question higher penalties for export violations.

A spokesperson for the Commerce Department declined comment. TSMC spokesperson Nina Kao said successful a connection that the institution is committed to complying with the law. She added that TSMC has not supplied to Huawei since mid-September 2020 and that they are cooperating with the Commerce Department.