Minister of Economic Affairs J.W. Kuo (郭智輝) yesterday defended Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), saying the world’s largest contract chipmaker abides by the law after a report claimed TSMC could face a large fine following an export control investigation by the US Department of Commerce (DOC).
Speaking with reporters on the sidelines of a meeting at the legislature’s Economics Committee, Kuo said as a multinational company, TSMC observes the law in every county it operates, while the ministry 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 (AI) processor produced by Chinese telecom giant Huawei Technologies Co (華為).
Photo: Liao Chen-hui, Taipei Times
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 US-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 Technologies Ltd (算能科技) 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.
TSMC did not respond to questions about the Reuters report.
In October 2023, TSMC notified the US DOC that one of its chips was found by Techinsights in a Huawei product, in a possible violation of US 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.
Meanwhile, Reuters also reported that US President Donald Trump said at a Republican National Congressional Committee event on Tuesday that he told TSMC it would pay a tax of up to 100 percent if it didn’t build its plants in the US.
Last month, TSMC pledged to invest an additional US$100 billion in Arizona over the next few years to build three more advanced wafer fabs, two IC assembly plant and one research and development center, on top of a US$65 billion investment it has already planned for building three fabs in Arizona.
Kuo said yesterday that he has faith TSMC will fulfill its investment commitment.
The minister also responded to a lawmaker’s question about GlobalFoundries Inc exploring a potential merger with United Microelectronics Corp (聯電) to create a more resilient maker of mature chips in the US, saying he believed it would not happen.
Additional reporting by Meryl Kao
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