TSMC may have violated US sanctions. Apple chip production in jeopardy

The U.S. Department of Commerce is investigating whether Apple’s semiconductor maker TSMC violated U.S. sanctions against China by supplying smartphones and AI chips to Huawei. This investigation was driven in part by Huawei’s remarkable ability to resume competition with the iPhone.

If found guilty, TSMC could face sanctions that could hamper its ability to produce future Apple chips…

Important background on iPhone vs. Huawei

Huawei’s smartphones used to compete fiercely with the iPhone not only in China but around the world. This situation ended when the US government imposed sanctions on China and banned US companies from exporting advanced technology to China.

This includes 5G chips made in the United States, effectively eliminating Huawei’s competitiveness as it cannot launch high-end smartphones without 5G.

However, the situation changed completely in 2023 when Huawei released the Mate 60 equipped with 5G. No one could understand how this was possible, given that Chinese companies did not have the necessary technology to manufacture the chips. The US National Security Adviser also commented on the surprising development.

There is a strong suspicion that US sanctions were violated, and an investigation has begun.

TSMC may have violated sanctions

information Apple’s chipmaker TSMC is suspected of using US-made equipment to supply 5G and AI chips to Huawei.

The U.S. Department of Commerce is investigating whether Taiwan Semiconductor Manufacturing Co., Ltd.’s production of artificial intelligence and smartphone chips for Chinese tech giant Huawei violates U.S. export rules. Two people with direct knowledge of the matter said that.

If the chips were indeed provided by TSMC, the order was likely placed in the name of the intermediary company, but the chip manufacturer would need to perform due diligence checks to verify the identity of the end user. . An investigation will determine whether TSMC did so.

May impact Apple

If TSMC is found to have failed to comply with its obligations, it could face penalties that could affect its ability to produce future Apple chips.

If the Commerce Department finds that TSMC violated export rules in its dealings with Huawei, it could impose fines or more severe penalties, including temporarily restricting TMSC’s access to U.S. technology.

TSMC said it has compliance systems in place, but is cooperating fully with the investigation and is taking its own steps to determine whether the test was failed.

9to5Mac’s opinion

There were several possible explanations, but the theory that someone broke US sanctions to supply Huawei with 5G chips was always thought to be the most likely.

Of course, Apple is not involved in any way, but if it turns out that TSMC was actually at fault, it could find itself caught up in the aftermath.

While one might hope that the U.S. Department of Commerce would consider U.S. interests and limit fines to fines, a unified mindset is not always evident in the government’s response.

Photo by Sajjad Noli on Unsplash