Taiwan Semiconductor Manufacturing Co (TSMC) may face a penalty exceeding $1bn to settle a US export control investigation, Reuters reported citing sources familiar with the matter.
The probe concerns a chip TSMC manufactured that ended up in a Huawei AI processor.
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The US Department of Commerce has been investigating TSMC’s work for China-based Sophgo, a Chinese company which was blacklisted in January 2025, over TSMC chips in Huawei processor.
The chip made by the contract chipmaker reportedly matched one found in Huawei’s Ascend 910B AI processor, sources told the news agency.
Huawei is also on a US trade list restricting it from receiving goods made with US technology.
TSMC’s chipmaking equipment includes US technology, making its Taiwan factories subject to US export controls.
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By GlobalDataThese controls prevent the company from making chips for Huawei or producing certain advanced chips for any Chinese customer without a US licence.
The potential $1bn-plus penalty arises from export control regulations allowing fines up to twice the value of transactions that violate the rules.
It remains unclear how the Trump administration will proceed with TSMC or when the matter will be resolved, the report added.
Commerce Department officials have indicated plans to seek higher penalties for export violations.
TSMC spokesperson Nina Kao stated that TSMC is committed to complying with the law and has not supplied to Huawei since mid-September 2020.
The situation comes at a time when the Trump administration imposed a 32% levy on imports from Taipei, excluding chips, though further levies on semiconductors are said to be being considered.
In January 2025, TSMC commenced the production of “advanced” four-nanometre chips in Arizona in the US.
Subsequently, in March, TSMC announced a $100bn investment plan in the US, including building five additional chip facilities. This brought TSMC’s total US investment to $165bn.
The move is said to align with the US strategy to strengthen domestic manufacturing and secure a larger share of the global semiconductor market.
