TSMC notified both the US and Taiwanese governments following the incident. Credit: ToyW/Shutterstock.

Taiwan Semiconductor Manufacturing (TSMC) has halted shipments to one of its clients upon discovering that a chip it supplied ended up with China-based Huawei Technologies, reported Bloomberg News.

The incident could represent a breach of US export controls aimed at limiting the Chinese military’s capabilities.

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Taiwan, which is facing ongoing military and other threats from China, has implemented its own export controls to prevent the production of advanced chips within China.

The suspension, which began earlier in October 2024, followed the findings of tech research company TechInsights, which deconstructed a Huawei product and located a TSMC chip.

TechInsights discovered that latest AI servers of Huawei Technologies contained processors made by TSMC.

The situation has been deemed an “important warning event” by TSMC, with the earliest trace of the issue dating back to 11 October 2024. The company has since notified both the US and Taiwanese governments.

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The latest move comes amid heightened US efforts to enforce export controls, specifically targeting companies like Huawei from obtaining, designing, or manufacturing advanced semiconductors.

TSMC was cited by Bloomberg News as saying in an emailed statement: “TSMC is a law-abiding company, and we are committed to complying with all applicable rules and regulations, including applicable export controls.

“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.”

In response, Huawei said it hasn’t “produced any chips via TSMC after the implementation of the amendments made by the US Department of Commerce to its FDPR that target Huawei in 2020”.

House China Select Committee chairman John Moolenaar said: “Reports that cutting-edge TSMC-manufactured chips have contributed to Huawei’s AI development represent a catastrophic failure of US export control policy.

“AI accelerators, like the one that these chips fuelled, are at the forefront of our technology race with the CCP, and I fear the damage done here will have significant consequences for our national security. Congress needs immediate answers from both BIS and TSMC about the scope and volume of this disaster. The US government must take immediate steps to ensure this does not happen again.”