TSMC has reportedly cut off a company that sent its chips to Huawei

Chipmaking giant Taiwan Semiconductor Manufacturing Co. (TSMC) halted semiconductor shipments to a client that may have illegally sent the chips on to Huawei, according to Bloomberg. That follows reports that TSMC had informed the US government that its chips appeared in one of Huawei’s AI accelerators. There’s no confirmation on whether the company was acting on Huawei’s behalf or where it’s based.

TSMC cut off shipments to the entity in mid-October after it noticed that the same chips had appeared in Huawei products. It notified the US and Taiwanese governments of this latest development and is further probing the matter, Bloomberg‘s sources said. They asked not to be identified given the sensitive nature of the matter.

Yesterday, Bloomberg and The Financial Times reported that Canadian research firm TechInsights had spotted TSMC chips in a Huawei AI accelerator, a clear violation of US sanctions. That brought into question how Huawei had obtained those chips, with a third-party company being a strong possibility.

In 2020, the US Commerce Department implemented trade restrictions against Huawei that barred the company from obtaining chips made by foreign firms. Earlier this year, the US government further tightened restrictions by revoking its licenses with Intel and Qualcomm to produce chips for its devices.

In a previous statement provided to the Commerce Department, TSMC denied any working relationship with Huawei since mid-September of 2020. TSMC also told Bloomberg that it hasn’t produced any chips for Huawei due to the amended restrictions. For its part, Huawei said in a statement yesterday that it hasn’t used any chips sourced from TSMC since the 2020 restrictions were enacted.

Rather than using TSMC, Huawei was supposedly obtaining chips from a local partner, China’s Semiconductor Manufacturing International Corp. (SMIC) — including a 7-nanometer processor for Huawei smartphones. However, US officials doubted that SMIC could build such chips at sufficient scale to meet market demand.