TSMC Halts Chip Shipments Amid Huawei Violation Concerns

Taiwan Semiconductor Manufacturing Company (TSMC) has delayed shipments to an unknown client after discovering that one of its chips was utilised in a Huawei product, potentially violating US export prohibitions. The corporation initiated an internal investigation two weeks ago and has since informed the US and Taiwanese governments about the problem, according to a Taiwan trade and economic official.

According to the official, TSMC ceased delivery to the customer issue after discovering that the chip had wound up in a Huawei handset. The insider, who spoke on the condition of anonymity, emphasised the severity of the occurrence, describing it as an ‘important warning event’ within TSMC. The problem apparently surfaced around 11 October.

This development raises questions about compliance with US export restrictions, which prohibit the selling of advanced chips to Chinese companies such as Huawei. The US government has taken severe measures to block the Chinese military's access to cutting-edge technology, with a particular focus on Huawei as part of its broader export control regulations.

While the source did not reveal the identity of the customer whose shipments were halted, TSMC stated that it had informed with Taiwanese and US regulators about the incident. A second unidentified official stated that TSMC had yet to notify Taiwan's government of the client's name.

Huawei And US Export Restrictions

TSMC's move followed a notice from US officials when TechInsights, a tech research group, disassembled a Huawei product and discovered a TSMC-manufactured chip. This has been highlighted as a potential violation of US export rules. In 2020, the United States government imposed export limits on advanced artificial intelligence (AI) processors to China, citing concerns over China's military growth. 

Huawei has been a key target of these attempts, with Washington attempting to block the corporation from acquiring, creating or producing sophisticated semiconductors. Despite these attempts, Chinese companies have attempted to circumvent the limitations. Earlier this year, reports surfaced that Chinese groups were accessing advanced US semiconductors via cloud services offered by corporations such as Amazon.

Given geopolitical tensions and military concerns from mainland China, Taiwan has implemented strict export controls to prevent advanced chip manufacture in China. Taiwanese officials have stated that they remain committed to US export control compliance and are actively monitoring the situation.

The world's largest contract chipmaker, TSMC, declined to comment on the issue. Its response and further probe are likely to have substantial ramifications for Taiwan's semiconductor industry, which is essential to worldwide chip supply chains.