The Department of Commerce is currently investigating whether Taiwan Semiconductor Manufacturing Company (TSMC) assisted Huawei in circumventing export controls to boost its artificial intelligence (AI) chip manufacturing capabilities. This probe raises concerns about the implications for TSMC’s significant financial support from the U.S. under the CHIPS Act. Read more here.
In April, TSMC received $6.6 billion in CHIPS Act funding to bolster its investment in advanced semiconductor manufacturing capabilities in Phoenix, Arizona. This initiative was part of the Biden-Harris administration’s efforts to enhance U.S. economic and national security by securing a domestic supply of semiconductors critical to burgeoning industries, including AI, consumer electronics, and automotive sectors.
Last year, the Department of Commerce published a final rule aimed at preventing CHIPS funds from benefiting foreign countries of concern, implicitly referring to China. This rule included provisions to recover funds if recipients were found to be aiding technology transfer that could pose national security risks.
Should the investigation reveal that TSMC knowingly facilitated Huawei’s access to U.S. infrastructure or expertise, it could lead to the clawback of TSMC’s funding, as the company may have bypassed guardrails designed to prevent such international collaborations. However, given TSMC’s prominence as a CHIPS Act beneficiary, second only to Intel, such punitive actions might appear unlikely.
At this time, the Department of Commerce has not disclosed whether the probe’s findings could directly impact TSMC’s funding from CHIPS. Additionally, attempts to secure comments from the Department on the ongoing investigation remain unanswered.
This unfolding situation continues to be monitored, as its outcome could potentially affect TSMC’s operations in Arizona and broader U.S. strategic interests regarding technological advancement and competition.