TSMC Confirms It Notified U.S. Authorities About Potential Chip Shipment to Banned Entity

The Taiwan Semiconductor Manufacturing Company (TSMC) has officially confirmed that it notified both U.S. and Taiwanese authorities in October 2024 regarding a potential incident in which a semiconductor it produced may have reached a restricted entity, in violation of export controls. This disclosure comes amidst heightened scrutiny over TSMC’s role in the global chip supply chain and its obligations under evolving U.S. trade regulations.

At the core of the controversy is whether TSMC-manufactured chips contributed to Huawei’s AI processor, the Ascend 910B, despite a U.S. ban prohibiting chip shipments made on nodes 16nm or smaller to the Chinese firm. TSMC stated in its 2024 annual report:

“In October 2024, TSMC notified relevant U.S. and Taiwan authorities that one type of its customer’s chip manufactured by it might have been diverted to a restricted entity or incorporated into a restricted entity’s product, and since then has been cooperating with the authorities’ requests for additional information and documents.”

The chip in question was reportedly ordered by Chinese firm Sophgo and may have ultimately ended up in Huawei’s Ascend 910B AI processor. This claim aligns with a previous Reuters report suggesting that TSMC could face up to $1 billion in fines from the U.S. government for the alleged violation. However, TSMC had previously denied knowledge of being under investigation at the time.

The broader issue at hand highlights the difficulties global chipmakers face in maintaining compliance with dynamic trade regulations, especially those implemented by the U.S. under its export control policies targeting China’s semiconductor industry. TSMC noted in its filing that while it has strong export control policies, its limited visibility into downstream supply chains makes full oversight difficult:

“TSMC’s role in the supply chain limits its visibility into the downstream use or user of final products that incorporate semiconductors manufactured by it... making it difficult to ensure that chips are not diverted to unintended end use or end-user, including potentially by its business partners or third parties with an intent of circumvention.”

The company added that it remains exposed to risks including restricted access to manufacturing equipment and materials if found to be in breach of U.S. or international trade laws.

This confirmation reflects an ongoing pattern of tensions between global semiconductor giants and geopolitical forces, especially as the U.S. seeks to curtail Chinese advancements in high-performance computing. TSMC’s proactive communication with both Washington and Taipei underscores the growing importance of legal and political oversight in cross-border tech operations.

What’s your take on TSMC’s ability to control where its chips end up? Should chipmakers be held more accountable for downstream misuse?