Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest contract chipmaker, is under investigation by the U.S. Department of Commerce for potential violations of export controls. The probe centers on TSMC's production of chips for the Chinese firm Sophgo Technologies Ltd., one of which was reportedly found in Huawei Technologies Co.'s Ascend 910B AI processor. Huawei has been on the U.S. trade blacklist since 2019 due to national security concerns, prohibiting it from receiving U.S.-based technology, including indirectly through third-party manufacturing. If found in violation, TSMC could face a fine exceeding $1 billion.

The investigation underscores the complexities of global semiconductor supply chains and the challenges companies face in complying with international trade regulations. TSMC's alleged involvement in supplying technology to Huawei highlights the geopolitical tensions influencing the tech industry.

In October 2024, TechInsights, a technology research firm, discovered a TSMC-produced chip in Huawei's Ascend 910B AI processor. This finding prompted TSMC to suspend shipments to Sophgo and notify U.S. authorities. Sophgo, affiliated with cryptocurrency mining equipment company Bitmain Technologies Ltd., has denied any direct or indirect business with Huawei and claims compliance with all laws.

In January 2025, the U.S. Department of Commerce added Sophgo to its trade blacklist, restricting its access to U.S. technology. The potential fine for TSMC could be up to twice the value of the transactions in question, reflecting the severity with which the U.S. government views such violations.

TSMC maintains it has not supplied Huawei since September 2020 and is cooperating with authorities. The company stated, "We are not aware of TSMC being the subject of any investigation at this time."

This case arises amid sensitive U.S.-Taiwan trade negotiations and could impact TSMC’s standing and future dealings, especially given the company's critical role in the global semiconductor supply chain. The situation also highlights the broader challenges multinational corporations face in navigating complex international trade laws and the consequences of potential violations.

The ongoing investigation into TSMC's potential export control violations serves as a stark reminder of the intricate interplay between global trade regulations, corporate compliance, and geopolitical dynamics. As the situation unfolds, it will be crucial to monitor the outcomes and their broader implications for the semiconductor industry and international trade relations.