The U.S. Department of Commerce is reportedly investigating whether Taiwan's chipmaking giant TSMC produced AI or smartphone chips for China's Huawei.
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00:00The U.S. Department of Commerce is reportedly investigating whether TSMC produced advanced
00:06chips for China's Huawei in what would be a breach of U.S. export rules.
00:11Louise Wat is following the story for us and joins us now from the Taiwan Plus newsroom.
00:16Louise, what more can you tell us?
00:19Well, Yvonne, this is just one outlet that's reporting this.
00:25The San Francisco-based The Information, which is viewed as a reliable industry source.
00:32They cite two anonymous sources as saying the U.S. Department of Commerce is investigating
00:38whether TSMC has been making AI or smartphone chips for Huawei.
00:46This is an issue because the U.S. wants to stop China from developing a cutting-edge
00:52semiconductor industry that could benefit its military, because many of these advanced
00:59chips often end up in military systems.
01:03And since 2020, the U.S. has banned Huawei from getting its hands on chips, from buying
01:10chips made using U.S. equipment and technology.
01:16And TSMC uses U.S. equipment when it's making its own chips.
01:21The Information reports that one possibility investigators are looking at is that Huawei
01:28bought chips indirectly from TSMC through third-party companies.
01:34So the issue is, did TSMC conduct good enough due diligence when it receives its orders?
01:41These kinds of supply chains can be complicated because you're not just buying equipment or
01:46components from one company.
01:48They also buy their stuff from other companies who, in turn, have their own suppliers.
01:54So it can be hard to track.
01:56Now, TSMC's response today.
01:59They say,
02:00TSMC is a law-abiding company and we are committed to complying with all applicable rules and
02:07regulations, including applicable export controls.
02:11We maintain a robust and comprehensive export system for monitoring and ensuring compliance.
02:19And they went on to say,
02:20If there are ever any reasons to believe there may be issues, they will act promptly to ensure
02:28compliance.
02:29We've been reaching out to the U.S. Department of Commerce to try and get confirmation on
02:34whether they are indeed investigating TSMC, but so far they've given no comment.
02:41Louise, this is, as you say, just a reported investigation at the moment.
02:47But what would be the potential consequences be for TSMC if it was found to be selling
02:51chips to Huawei?
02:54Well, TSMC could receive a fine from the U.S. Department of Commerce.
03:02Or they could even be restricted in accessing U.S. technology.
03:09But let's not forget that any investigation would be politically sensitive.
03:14On the one hand, the U.S. views Taiwan as an ally as it tries to cut China out of global
03:21supply chains.
03:23And on the other hand, TSMC is simply the most important chipmaker in the world.
03:28Nearly 90% of the world's most advanced chips are made by TSMC.
03:34And its U.S. customers include big U.S. companies like Apple and Nvidia.
03:41The Biden administration has given more than US$6 billion to TSMC to help it produce chips
03:48in Arizona.
03:50And that's to revive the U.S.'s own chipmaking industry.
03:55So while TSMC needs American technology, the U.S. also very much needs TSMC.