Alleged Ties with Huawei, Two Chip Developers Cut off by TSMC

Amid the ongoing US-China chip war, high-end chip manufacturers remain highly vigilant against possible violations of US export controls. According to sources familiar with the matter, Taiwan’s leading chipmaker, TSMC, has suspended supply to at least two chip developers as they are suspected of attempting to circumvent US export controls on Huawei.

These two companies had placed orders to use TSMC’s advanced 7-nanometer process technology to produce chips. Sources added that the gradual increase in these orders raised red flags for TSMC.

Last week, Reuters reported that TechInsights, a technology research company, found TSMC chips while dissecting Huawei’s “Kirin 910B”. Sources mentioned that about two weeks ago, TSMC informed the US upon learning about this discovery. Around the same time, TSMC also halted shipments to a customer because the chip provided to them ended up in Huawei products.

In a subsequent report, Reuters cited two sources stating that TSMC had stopped shipments to Chinese chip designer, Sophgo, due to this issue.

TSMC stated that since mid-September 2020, the company has ceased supplying Huawei. The Taiwanese chip giant told Nikkei Asia, “We maintain a robust and comprehensive export control system to monitor and ensure compliance. If we have any reason to believe there are potential issues, we will take immediate actions to ensure compliance, including conducting investigations and actively communicating with relevant parties, including our ongoing cooperation with the US Commerce Department.”

A source told Nikkei Asia that actions to evade US export controls are difficult to detect because chip developers can use multiple non-Chinese entities to disguise their orders with contract chip manufacturers.

In recent years, the US has intensified efforts to restrain the Chinese Communist Party from obtaining advanced chips to prevent their military development. Any chip manufacturer using chip manufacturing equipment containing US technology is prohibited from manufacturing 14-nanometer or higher-grade chips for Chinese customers without obtaining a US export license.

The US also restricts Chinese companies developing a certain specification of powerful artificial intelligence chips from placing orders with TSMC and Samsung.