TSMC Ends Partnership With Supplier for Huawei AI Chip Delivery

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TSMC Terminates Collaboration with Singaporean Chip Producer

In a significant move, Taiwan Semiconductor Manufacturing Company (TSMC) has severed its relationship with a Singapore-based chip manufacturer following a troubling investigation. Reports emerging from the South China Morning Post indicate that products from the company, PowerAIR, were discovered within a Huawei AI processor. This revelation prompted TSMC to take decisive action due to concerns over compliance with U.S. sanctions aimed at preventing Huawei from accessing advanced semiconductor technology, which could pose a risk to national security interests.

Intensifying Scrutiny of Supply Chains

Even amidst ongoing restrictions, there are indications that TSMC’s chips have been finding their way into Huawei’s products. As the demand for advanced technology surges with the rise of artificial intelligence, TSMC has ramped up its oversight of shipments to the Chinese market. A recent investigation identified a TSMC chipset embedded in a Huawei AI device, prompting the chip giant to reevaluate its partnerships.

A detailed report highlights TSMC’s concerns over PowerAIR, a relatively small player in the semiconductor space. The fallout from the investigation emphasizes the challenges of maintaining compliance in the face of complex global supply chains.

The Impact of U.S. Sanctions on Huawei

Sanctions against Huawei, which have escalated significantly during the Biden administration, have compelled the Chinese powerhouse to resort to various strategies to acquire necessary chip technology. Key among these tactics is its reliance on China’s Semiconductor Manufacturing International Corporation (SMIC), which also faces its own restrictions on accessing the latest manufacturing equipment. Reports indicate that SMIC’s capabilities are limited, particularly concerning 7-nanometer technology and below, due to these ongoing sanctions.

Challenges in the Semiconductor Landscape

Following the investigation, the dismantling of the Huawei chip confirmed the integration of TSMC components, reinforcing suspicions about compliance lapses. Furthermore, Huawei is reportedly attempting to lure TSMC engineers with lucrative offers, including salaries that could be triple their current compensation, enhancing competition in the talent market.

Additionally, Huawei is believed to be targeting suppliers for ASML, the sole manufacturer of advanced machines necessary for producing cutting-edge chips. This effort underscores the intricate web of alliances and rivalries within the semiconductor ecosystem. Meanwhile, SMIC’s inability to procure extreme ultraviolet (EUV) lithography machines has necessitated the use of less efficient techniques, such as multi-patterning, ultimately compromising product quality and raising production costs.

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