Taiwan Semi not subject of US probe over AI chip curbs on Huawei

Taiwan Semiconductor Manufacturing (NYSE:TSM) said it alerted the U.S. government about a potential attempt to have it manufacture AI chips for Huawei Technologies.

“We proactively communicated with the US Commerce Department regarding the matter in the report. We are not aware of TSMC being the subject of any investigation at this time,” said Taiwan Semiconductor said in an emailed statement to Seeking Alpha. “In compliance with the regulatory requirements, TSMC has not supplied to Huawei since mid-September 2020.”

Last week, TSM said it was committed to complying with all applicable rules and regulations, including applicable export control following a report that the U.S. Commerce Department was probing if the Taiwanese foundry was making AI or smartphone chips for the Chinese company Huawei, and violating U.S. export rules for China.

TSM reiterated in its email on Tuesday that it is a law-abiding company and was committed to complying with all applicable rules and regulations, including applicable export controls.

The company noted that it maintains a comprehensive export system for monitoring and ensuring compliance. “If we have any reason to believe there are potential issues, we will take prompt action to ensure compliance, including conducting investigations and proactively communicating with relevant parties including customers and regulatory authorities as necessary,” TSM stated.

TSM recently notified the Department after a customer placed orders for a chip that resembled Huawei’s chip, Ascend 910B, The Financial Times reported, citing people with knowledge of the matter.

Huawei’s Ascend 910B chips are used in China to train large language models, or LLMs, that power AI-chatbots, and were made to rival chips from Nvidia (NVDA). Nvidia and other American companies do not supply advanced chips to China due to U.S. export curbs. According to a prior report, a Huawei executive had said that around half of China’s LLMs were trained with Huawei’s chips and that 910B’s performance had surpassed Nvidia’s A100 in training models.

Taiwan Semi made the precursor of the 910B chip before the U.S. export restrictions sanctions came into effect, according to the FT report.

After getting an order that raised doubts, TSM talked to the customer involved and also with the Commerce Department, the report noted, citing a person close to TSM. The department’s probe on the issue would be “related to” TSM but the company would not be the target of an investigation, the report added.

There had been “conversations” between TSM and the Department about a potential attempt at bypassing the export curbs but there was no indication of malicious compliance violations on TSM’s part, the report added citing a person with knowledge of the matter.