As the global artificial intelligence (AI) race presses on amid a US-China trade war, the Taiwan Semiconductor Manufacturing Company (TSMC)—a $514 billion titan that manufactures most of the world’s AI chips—is warning that it may not be possible to keep its customers’ most advanced technology out of China’s hands.
US export controls require chipmakers to monitor shipments and know their customers to restrict China’s access to AI chips. But in a recently published 2024 report, TSMC confirmed that its “role in the semiconductor supply chain inherently limits its visibility and information available to it regarding the downstream use or user of final products that incorporate semiconductors manufactured by it.”
Essentially, TSMC expects that it plays too big a role in the semiconductor industry to stop all the possible unintended end-uses of the semiconductors it manufactures. Similarly, it appears impossible to track all the third parties determined to skirt sanctions. And if TSMC’s hands are truly tied, that ultimately means that the US can’t effectively stop the latest AI tech from trickling into China.
That remains a problem for TSMC, since, back in October, a research firm called TechInsights took apart an AI accelerator from China-based and US-sanctioned Huawei and found that TSMC had produced the AI chip made by Nvidia that powered the product, Bloomberg reported. The semiconductor company increasingly risks sanctions for failing to comply with export controls, TSMC’s report said, even if it seemingly has nothing to do with its customers diverting shipments into China.
At that time, TSMC promptly notified US officials of the feared national security risk, confirming that one of its customers’ chips “might have been diverted to a restricted entity or incorporated into a restricted entity’s product,” TSMC’s report said. However, although the company fully cooperated with the resulting US and Taiwan government probes, TSMC said, there currently appears to be no perfect solution to deter recurring violations.
