TSMC blows whistle on potential sanctions-busting shenanigans from Huawei

TSMC has reportedly tipped off US officials to a potential attempt by Huawei to circumvent export controls and obtain AI chips manufactured by the Taiwanese company.

The world's largest semiconductor contract manufacturer sounded the alarm after a customer made orders for a chip resembling Huawei's Ascend 910B, a processor outfitted for training large language models, according to the Financial Times.

This follows a report in The Information that the Department of Commerce was probing whether TSMC has been supplying AI or smartphone chips to Huawei in contravention of US export controls.

However, TSMC said in a statement: "We proactively communicated with the US Commerce Department regarding the matter in the report. We are not aware of TSMC being the subject of any investigation at this time."

The US government has increasingly clamped down on the shipping of advanced AI chips to Chinese companies over the past few years, citing national security concerns about China's military AI capabilities.

Earlier today, The Register reported how Congress is tightening the screws on Japan to reduce sales of chipmaking equipment to China.

Huawei in particular has long been an entity of concern for the US over fears that the company's telecoms equipment is laced with backdoors that Beijing could exploit for the purpose of espionage. China has repeatedly accused Uncle Sam of the same.

Brutal sanctions against Huawei have shrunk the tech giant's bottom line amid rip-and-replace mandates for telecoms providers in the States that spread to allies in the UK and European Union.

Since Huawei is arguably China's pre-eminent technology company, manufacturing consumer goods like smartphones and laptops alongside communications infrastructure and autonomous driving systems, the US has also attempted to choke off its supply of chips made with American technology – present in most of the world's semiconductor fabs – thus preventing Huawei from obtaining chips from TSMC, which manufactures more than 90 percent of the most advanced chips.

A predictable side effect of these export restrictions, though, is that Beijing has embarked on a tech self-sufficiency drive, with Chinese AI patent filings surging 42 percent for 2023-24, as The Register reported this week. Likewise, Chinese chip designer Loongson has claimed that a forthcoming processor based on its instruction set architecture, LoongArch, "can reach the performance of the x86 processor under the 7nm process." In other words, it is only three to five years behind the likes of American chip giants Intel and AMD.

TSMC's statement added that it is "a law-abiding company and we are committed to complying with all applicable rules and regulations, including applicable export controls. In compliance with the regulatory requirements, TSMC has not supplied to Huawei since mid-September 2020."

Meanwhile, a spokesperson for the Commerce Department's Bureau of Industry and Security told the FT: "We cannot comment on whether any investigation is ongoing. BIS is committed to ensuring compliance with the robust controls we have put in place related to China's acquisition of advanced semiconductors. ®"