TSMC to Face Potential $1 Billion Fine Over AI Chip Concerns

According to reports from foreign media, sources have revealed that TSMC may be facing a fine of up to $1 billion or more, following allegations that chips it produced were integrated into AI server processors used by a domestic Chinese company. These chips could be linked to AI applications under investigation by U.S. authorities.

The U.S. Department of Commerce is reportedly investigating the relationship between TSMC and Chinese tech company, Sophgo. The investigation stems from the discovery that TSMC-manufactured chips, customized for Sophgo, are identical to those found in the Ascend 910B AI processors used by a domestic Chinese company. This suggests that TSMC's chips were ultimately incorporated into the AI processors in question.

In response, TSMC has declined to comment on the ongoing rumors and investigation.

Lennart Heim, a researcher at the RAND Center for Technology and Security Policy, mentioned that TSMC has manufactured nearly 3 million chips based on Sophgo's orders in recent years, raising concerns that these chips may have found their way into the AI processors.

The potential fine, which could exceed $1 billion, is linked to U.S. export control regulations, which permit fines up to twice the value of the violating transaction.

Earlier this year, Reuters reported that after TSMC's chips were discovered in AI processors linked to the Chinese company, TSMC ceased supplying chips to Sophgo.

This development coincides with a critical moment in U.S.-Taiwan relations, following former President Donald Trump's imposition of a 32% tariff on imports from Taiwan. Although these tariffs did not apply to chips, Trump's team has indicated that they are considering imposing tariffs on semiconductor products as well.