Huawei’s chip workaround could cost Apple’s chipmaker over $1 billion

Over a month ago, a report claimed Huawei managed to get its hands on TSMC-made chips – despite the US export ban from 2020 that blocks any chip foundry using American tech from shipping advanced silicon to Huawei.

Turns out, the company reportedly pulled it off through a “supply chain breach,” getting more than 2 million AI chips from TSMC. And now, it looks like TSMC is facing serious consequences for it.

A new report says TSMC – Apple’s main chip partner – could be hit with a fine of $1 billion or more as part of a US investigation into one of its chips that allegedly ended up inside Huawei’s AI processor. That is according to two people familiar with the matter.

The US Department of Commerce has been investigating TSMC’s involvement with China-based Sophgo, a design company whose chip made by TSMC reportedly matches the one found in Huawei’s high-end Ascend 910B AI processor. Reportedly, TSMC made nearly three million chips in recent years that matched the design ordered by Sophgo and likely ended up with Huawei.

The possible billion-dollar-plus penalty could come under US export control laws, which allow fines up to twice the value of illegal transactions.

Since TSMC’s equipment includes US tech, even its factories in Taiwan fall under US export rules. That means it can’t legally produce chips for Huawei – or other advanced chips for any Chinese firm – without a US license.

TSMC says it is committed to complying with the law and emphasized that it hasn’t supplied Huawei since mid-September 2020. The tech giant is also cooperating with the US Commerce Department.