TSMC accuses Huawei of circumventing sanctions, reports to US authorities on AI chip manufacturing

October 23, 2024

Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest semiconductor contract manufacturer, revealed on the 23rd that it reported to the U.S. Department of Commerce the possibility that China's Huawei was trying to manufacture AI chips to circumvent U.S. export restrictions.

According to TSMC, the design of semiconductor chips ordered by a certain customer closely resembled the large language model (LLM) processor 'Ascend 910B' developed by Huawei. TSMC has stopped supplying products to Huawei since September 2020 in compliance with U.S. sanctions.

The Ascend 910B is an AI processor that is said to have performance equivalent to NVIDIA's A100 graphics card, achieving a processing speed of 9.7 teraflops in 64-bit floating-point operations. Analysis by the Canadian market research company TechInsights has found traces of TSMC's technology being used in this chip.
Of particular note, according to the Wall Street Journal, Huawei plans to release a successor chip to the Ascend 910B later this month, which is said to have performance comparable to NVIDIA's latest model H100. It is reported to have already secured orders for approximately 70,000 units worth around 2 billion dollars.

Two years ago, the U.S. government introduced measures to restrict the export of high-performance AI chips to China with the aim of preventing the enhancement of China's military capabilities. The core of this regulation is the comprehensive ban on supplying chips manufactured using U.S. technology and equipment to China. In particular, Huawei has become a major regulatory target in the U.S. due to concerns that its communication equipment may contain backdoors that could be exploited for Chinese government espionage. China strongly denies these allegations and instead criticizes the U.S. for similar actions.

Last week, the US media The Information reported that the US Department of Commerce is investigating whether TSMC is supplying AI chips and smart phone chips to China's Huawei. This is related to the sanctions imposed on Huawei by the USA in 2019.
According to sources familiar with the matter, there is no evidence of "malicious" behavior by TSMC regarding regulatory compliance violations in this case. The Commerce Department's investigation is considered to be "relevant" to TSMC, but it is unlikely that the company will be the primary focus of the investigation.
In a statement, TSMC stated that "we are a law-abiding company and promise to comply with all applicable rules and regulations", emphasizing that it has completely halted supplies to Huawei since September 2020.