Bloomberg — Taiwan Semiconductor Manufacturing Co (TMS) discovered this month that chips it made for a specific customer ended up at Huawei Technologies Co, a possible violation of US sanctions aimed at cutting off the flow of technology to a Chinese national champion.
TSMC stopped customer shipments around mid-October after realizing that semiconductors manufactured for that entity had ended up in Huawei productsaccording to a person with direct knowledge of the matter. The chipmaker has since notified the U.S. and Taiwanese governments and is investigating the matter further, said the person, who asked not to be identified discussing a sensitive situation.
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It is not clear whether the TSMC client was acting on behalf of Huawei or where it is based. But the incident sheds new light on reports in recent days, including from The Information, that Washington had recently contacted TSMC to find out if the company had produced chips for the blacklisted Chinese company.
TSMC’s discovery raises questions about how Huawei, considered China’s best hope for rising in the semiconductor industry, came into possession of advanced chips. Research firm TechInsights recently found that Huawei’s latest AI servers contained processors made by TSMCthe largest manufacturing partner of Nvidia Corp (NVDA).
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Huawei has been on a sanctions list since 2020 and is prohibited from doing business with TSMC and its chipmaker peers without a license from the US government. In the last year, Huawei has trusted its local partner Semiconductor Manufacturing International Corp (SMIC) for production, including a 7-nanometer chip introduced last August in a Huawei smartphone.
But US authorities have questioned SMIC’s ability to make 7-nanometer chips at scale. Huawei’s use of TSMC production for its latest AI chips may be a sign reinforcing that narrative. The Taiwanese chipmaker has said it stopped all shipments to Huawei after September 15, 2020, something the company reiterated when asked about the TechInsights report.
A TSMC representative declined to comment on the latest development. A Huawei spokesperson had no immediate comment when contacted by Bloomberg News. On Tuesday, a spokesperson for the US Department of Commerce said the agency’s Bureau of Industry and Security is “aware of reports alleging potential violations of US export controls.”
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“TSMC is a law-abiding company, and we are committed to complying with all applicable rules and regulations, including applicable export controls,” the company said in its emailed statement Tuesday. “We proactively contacted the US Department of Commerce regarding the matter of the report. We are not aware of TSMC being the subject of any investigation at this time.”.
In a separate statement, Huawei said on Tuesday that it has not “produced any chips through TSMC following the implementation of amendments made by the US Department of Commerce to its FDPR targeting Huawei in 2020.” FDPR refers to the Foreign Direct Products Rule, a US trade restriction.
Taiwan respects US export control measures and will fully communicate this to TSMC, Economic Affairs Minister JW Kuo told reporters on Wednesday.
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BIS officials had met with TSMC executives in mid-October to discuss issues related to the chipmaker’s supply chain, including whether third-party distributors can provide restricted-access technology to China, according to another person familiar with the matter. , who described that meeting as collaborative. It was not clear if they touched on customer discovery.
AI accelerators -chips used to develop artificial intelligence models- They have become a precious commodity in the technology industry.
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Nvidiabased in Santa Clara, California, uses TSMC to produce its market-leading versions, which has boosted its sales and valuation over the past two years. The US has limited exports of Nvidia’s cutting-edge chips to China, and Huawei is offering its accelerators as a domestic alternative.
Huawei’s 910 – the precursor to the 910B – was in production in 2019, before the US government expanded sanctions on the Chinese telecommunications giant. Huawei stockpiled components from TSMC at the time, allowing the company to use a TSMC 5nm chip, which is a generation ahead of the 7nm chip, in a laptop launched late last year.
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