Economics minister defends TSMC amid Huawei-linked fine report

Taipei, April 9 (CNA) Economics Minister Kuo Jyh-huei (郭智輝) on Wednesday defended contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), saying the company abides by the law after a report claimed the firm could face a large fine following an export control investigation by the U.S. Department of Commerce (DOC).

Speaking with reporters on the sidelines of a Legislative Yuan hearing, Kuo said as a multinational company, TSMC observes the law in every county it operates, while the Ministry of Economic Affairs has not yet received any information about the possible fine.

Kuo's comments came after a Reuters report said earlier in the day that TSMC could face a fine of US$1 billion or higher when it aims to settle with the DOC after a recent probe in which a chip made by the Taiwanese company was found in the high-end Ascend 910B artificial intelligence processor produced by Chinese telecom giant Huawei Technologies Co.

Huawei was placed on a trade restriction list by Washington in 2019 for "national security reasons."

Citing two unnamed sources close to the matter, the report said the potential penalty of US$1 billion or more comes from export control regulations that allow for a fine of up to twice the value of any transaction that violates the sanction rules.

In the report, Lennart Heim, a researcher at U.S.-based RAND's Technology and Security and Policy Center said TSMC in recent years rolled out almost 3 million chips which matched the design ordered by Chinese IC designer Sophgo and likely ended up with Huawei.

Heim, who tracks AI development in China, said in the report that based on the design, which is for AI applications, TSMC should not have made the chip for a company headquartered in China, especially given the risk that it could be diverted to a restricted entity like Huawei.

According to Reuters, TSMC first came under scrutiny last fall as Canadian-based tech research firm TechInsights took apart a Huawei 910B AI chip and found a TSMC chip in the multi-chip system.

TSMC did not respond to questions about the Reuters report.

In October 2023, TSMC notified the U.S. DOC that one of its chips was found by Techinsights in a Huawei product, in a possible violation of U.S. export restrictions.

At the time, TSMC said it was committed to complying with all applicable rules and regulations, including export controls, and as such has not supplied Huawei since mid-September 2020.

According to Reuters, Huawei's Ascend 910B is the most advanced mass-produced AI chip available from a Chinese company, serving as an alternative to U.S.-based AI chip design leader Nvidia Corp.

In addition, Reuters also reported that Trump said at a Republican National Congressional Committee event he told TSMC it would pay a tax of up to 100 percent if it didn't build its plants in the U.S.

In March, TSMC pledged to invest an additional US$100 billion in the U.S. state of Arizona over the next few years to build three more advanced wafer fabs, two IC assembly plant and one research and development center.

Currently, TSMC is investing US$65 billion to build three fabs in Arizona with the first starting mass production in 2024.

Last week, Trump slapped "reciprocal tariffs" on countries having a large trade surplus with the U.S. A 32 percent tariff was imposed on Taiwan and the U.S. president said he will soon levy taxes on semiconductors.

While TSMC did not respond to questions about Trump's remarks, Kuo said he has faith TSMC will fulfill its investment commitment.

Taiwan and the U.S. are complementary with each other in technology development with Washington good at R&D and Taipei good at manufacturing, Kuo added.