**’TSMC’s Involvement in Manufacturing Confirmed**
**Unavoidable Impact If U.S. Imposes Export Sanctions’**
It has been confirmed that Taiwan’s TSMC-manufactured semiconductors were used in advanced artificial intelligence (AI) chips released by China’s Huawei last year. The U.S. Department of Commerce has been investigating whether TSMC was involved in manufacturing AI semiconductors, and this has been confirmed. Since 2020, the U.S. has initiated export controls to China on cutting-edge technologies like AI and semiconductors, increasing the stringency each year. Nevertheless, China has been bypassing these controls to secure advanced chips for product development.
According to Reuters on the 23rd, TSMC informed the U.S. Department of Commerce that its semiconductors were included in Huawei’s self-developed AI chip ‘Ascend 910B,’ released last year. TSMC is a foundry company that manufactures chips according to customer designs. A source close to TSMC told the Financial Times (FT) that TSMC reported to the U.S. Department of Commerce after receiving manufacturing orders similar to those for Ascend 910B, designed for large-scale language model training. On the 18th, TSMC stated that they would “take immediate action to ensure compliance with regulations, including actively communicating with regulatory authorities.”
In the tech industry, there are speculations that Huawei may have placed orders with TSMC through other companies. China also smuggles advanced semiconductors designated as restricted items by the U.S. through students studying abroad.
Besides this, China has established a 64 trillion won semiconductor fund and is enhancing its hardware competitiveness amidst the stringent U.S. export sanctions by pressuring domestic companies to use locally-produced semiconductors. Progress is also being made toward software independence. On the 22nd, Huawei released the latest version of its operating system (OS), ‘Harmony OS 5.0.’ This latest release marks the fifth upgrade of Harmony OS and includes 15,000 basic applications.
Harmony OS is an independently developed OS by Huawei following the onset of U.S. sanctions, applicable to smartphones, tablets, wearables, and is reportedly installed on over 1 billion electronic devices.
Yu Chengdong, Huawei’s Consumer Business CEO, stated that “Harmony OS is completely independent of Android and Apple’s iOS,” adding “the latest version provides a new option and market space for the global development of related industries.”
According to market research firm Counterpoint Research, Harmony OS’s market share in China was 17% in the first quarter, surpassing Apple’s iOS (16%) for the first time to rank second. Android was first with 68%.
It is uncertain whether TSMC knowingly violated U.S. sanctions on China. Although TSMC is a Taiwanese company, many of its major customers are American companies, such as Apple and NVIDIA, making it inevitable that TSMC would face impacts if the U.S. imposes export sanctions. For instance, last April, hard disk manufacturer Seagate was fined 400 billion won for selling 7.4 million drives to Huawei over one year, even after the Chinese export control law went into effect in 2020.