TSMC faces a potential penalty worth over a billion dollars from the US Commerce Department after it mistakenly produced chiplets that later joined Huawei's Ascend 910 AI processor. The fine may reach twice the value of unauthorized shipments because it involves many parts that bypassed export rules aimed at limiting Chinese access to advanced semiconductor technology. The issue began in late 2023 when TSMC processed orders from Sophgo, a partner of the crypto-mining company Bitmain. The chiplets come from advanced process nodes and house tens of billions of transistors. TechInsights discovered these chiplets during a teardown analysis of the Huawei Ascend 910 AI accelerator. This finding exposed a gap in the supply chain that occurred when TSMC did not monitor how the parts were used.
Once TSMC noticed the mix-up, it halted shipments from Sophgo and met with Commerce Department agents. In January, authorities placed Sophgo on the Entity List, which cuts its access to US semiconductor technology, and a report showed that Huawei acquired roughly two million Ascend 910B logic dies through shell companies that misled TSMC. Huawei favored chip dies from TSMC because domestic production faced challenges. The mishap forced TSMC to tighten customer checks and end its deal with Singapore-based PowerAIR after internal reviews. Officials start the enforcement process with a charging letter that explains violations and penalty calculations and allows a 30-day reply period. Currently, Washington limits AI processor exports to Chinese companies, and chipmakers face more pressure to tighten rules across global supply chains.
Once TSMC noticed the mix-up, it halted shipments from Sophgo and met with Commerce Department agents. In January, authorities placed Sophgo on the Entity List, which cuts its access to US semiconductor technology, and a report showed that Huawei acquired roughly two million Ascend 910B logic dies through shell companies that misled TSMC. Huawei favored chip dies from TSMC because domestic production faced challenges. The mishap forced TSMC to tighten customer checks and end its deal with Singapore-based PowerAIR after internal reviews. Officials start the enforcement process with a charging letter that explains violations and penalty calculations and allows a 30-day reply period. Currently, Washington limits AI processor exports to Chinese companies, and chipmakers face more pressure to tighten rules across global supply chains.
