TSMC could face US$1 billion fine over chip found in Huawei AI processor, sources say

Penalising TSMC comes at a critical moment for US-Taiwan relations after Trump slapped a 32 per cent levy on imports from the island

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TSMC is under a US investigation over a Huawei processor containing chips from the Taiwanese company. Photo: Reuters

Published: 10:45am, 9 Apr 2025

Taiwan Semiconductor Manufacturing Company (TSMC) could face a penalty of US$1 billion or more to settle a US export control investigation over a chip it made that ended up inside a Huawei Technologies artificial intelligence (AI) processor, according to two people familiar with the matter.

The US Department of Commerce had been investigating the world’s biggest contract chipmaker’s work for China-based Sophgo, the sources said. The design company’s TSMC-made chip matched one found in Huawei’s high-end Ascend 910B AI processor, according to the people, who requested anonymity because they were not authorised to speak publicly about the matter.

Huawei – a company at the centre of China’s AI chip ambitions that has been accused of sanctions busting and trade secret theft – is on a US trade list that restricts it from receiving goods made with US technology.

TSMC made nearly 3 million chips in recent years that matched the design ordered by Sophgo and likely ended up with Huawei, according to Lennart Heim, a researcher at RAND’s Technology and Security and Policy Centre in Arlington, Virginia, who is tracking Chinese developments in AI.

A billboard advertisement for a Huawei smartphone in Chongqing, China. Photo: Getty Images

The US$1 billion-plus potential penalty came from export control regulations allowing for a fine of up to twice the value of transactions that violated the rules, the sources said. Because TSMC’s chipmaking equipment includes US technology, the company’s Taiwan factories are within reach of US export controls that prevent it from making chips for Huawei, or producing certain advanced chips for any customer in China without a US licence.