TSMC Violations to Test BIS Resolve

Taiwan Semiconductor Manufacturing Company (TSMC) is under investigation by the U.S. Department of Commerce for potential violations of export control regulations, a case which may give Commerce Secretary Howard Lutnick and BIS Chief Jeffrey Kessler an opportunity to impose their promised "dramatic increase in enforcement and fines for people who break the rules."

The probe, first reported by Reuters,  centers on TSMC’s production of chips for Sophgo, a Chinese firm, which reportedly matched those found in Huawei’s Ascend 910B AI processor.

Huawei is on the U.S. Entity List, restricting it from receiving goods made with U.S. technology. Given that TSMC’s manufacturing processes involve U.S.-origin technology, any unlicensed supply to Huawei could constitute a breach of export controls.

The potential fine could exceed $1 billion, as export control regulations allow penalties up to twice the value of the violating transactions .

TSMC has stated it ceased supplying Huawei in September 2020 and is cooperating with U.S. authorities. The company suspended shipments to Sophgo in October 2024 after discovering the chips may have been redirected .

This investigation occurs amid broader U.S.-Taiwan trade tensions, including recent U.S. tariffs on Taiwanese imports. TSMC has announced plans to invest an additional $100 billion in U.S. chip manufacturing facilities, supplementing a prior $65 billion commitment .