TSMC Faces Major Penalty Over U.S. Export Control Inquiry
Taiwan Semiconductor Manufacturing Company might soon incur a fine surpassing $1 billion following a review by U.S. officials. The investigation centers on a chip produced at TSMC’s facilities that later appeared in an artificial intelligence processor manufactured by a well-known Chinese technology firm. The chip in question was originally developed for a China-based design company and has been linked to high-performance hardware used by a prominent Chinese firm.
U.S. authorities began examining TSMC’s production practices after learning that the component designed for the Chinese company was subsequently found in a sophisticated processor employed by a major Chinese tech enterprise. Two individuals familiar with the matter explained that this chip matches the design supplied by the design firm and now appears in a processor known for its AI capability. Because these sources spoke on condition of anonymity, details remain limited, although the information provided points to a serious compliance concern.
Regulations governing exports allow the U.S. Department of Commerce to impose fines that can reach up to twice the amount of the transaction’s value when a rule is broken. Since TSMC utilizes equipment containing U.S.-origin technology in its production plants in Taiwan, the company falls under directives that restrict manufacturing certain advanced components for customers in China without a proper U.S. license. Analysis by a researcher at a well-regarded policy center in Virginia revealed that the company has produced nearly three million chips matching the specifications ordered by the design firm. Many of these chips are believed to have ultimately reached the restricted Chinese tech company.
This development coincides with a period of reconsideration in trade policies between the United States and Taiwan. Recent adjustments by U.S. officials, including a 32-percent import tariff on goods from Taipei, have sparked debate about additional charges within the semiconductor field. Although the current tariffs do not cover chips, comments from U.S. decision-makers suggest that the semiconductor sector might face further financial penalties or regulatory changes soon.
Earlier reports confirmed that TSMC had outlined plans for an extensive investment in the United States, totaling nearly $100 billion. This commitment includes the establishment of five new chip production facilities over the coming years, which represents a significant step in expanding the company’s footprint outside Taiwan. Nevertheless, the export control review is expected to have implications for TSMC’s international dealings and may affect future projects involving technology sensitive to U.S. regulations.
A representative from TSMC stated that the company remains fully committed to following applicable laws. The spokesperson noted that shipments to the Chinese technology firm were discontinued in mid-September 2020 and confirmed that TSMC is actively working with U.S. officials throughout the inquiry. With further details on enforcement pending, industry observers await the next steps in this significant compliance case.
