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TSMC Faces Potential $1 Billion Fine in U.S. Export Control Investigation

The semiconductor giant is under scrutiny for chips allegedly linked to Huawei, while U.S. tariff threats push it to expand investments in American manufacturing.

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TSMC
Semiconductor chips are seen on a circuit board of a computer in this illustration picture taken February 25, 2022. REUTERS/Florence Lo/Illustration/File Photo
A security staff stands next to a logo of the Taiwan Semiconductor Manufacturing Co, (TSMC), during the investors conference in Taipei on July 16, 2014. TSMC, the world's biggest contract microchip maker, was to release second-quarter earnings results at an online conference. AFP PHOTO / SAM YEH (Photo credit should read SAM YEH/AFP/Getty Images)

Overview

  • The U.S. Department of Commerce is investigating TSMC for allegedly supplying chips, via Sophgo, that ended up in Huawei's AI processors, violating export control regulations.
  • TSMC could face a fine exceeding $1 billion, calculated as up to twice the value of transactions deemed to have violated U.S. rules.
  • Since late 2024, TSMC has suspended shipments to Sophgo and maintains it has not supplied Huawei directly since September 2020, emphasizing its compliance with U.S. laws.
  • President Trump has threatened TSMC with tariffs as high as 100% if it does not expand its U.S. manufacturing footprint, prompting the company to announce a $100 billion investment in new American facilities.
  • This case highlights escalating U.S.-China tensions over technology access and trade, with stricter enforcement of export controls and broader tariff strategies targeting the semiconductor industry.