The U.S. Commerce Department has launched an investigation into Taiwan Semiconductor Manufacturing Company (TSMC), a key supplier of chips for Apple’s iPhones and Macs. This investigation could have far-reaching implications for the tech giant’s production and supply chain.
The probe centers around concerns that TSMC may have violated sanctions by providing chips to Huawei Technologies. The investigation, initiated in early fall, stems from suspicions that TSMC might have contracted with an intermediary firm to manufacture smartphone and AI chips for Huawei. These suspicions are significant, as the U.S. imposed sanctions on Huawei in 2020, restricting its ability to acquire components from American companies without Commerce Department approval.
These sanctions also prohibit the use of chips manufactured with U.S.-sourced equipment. If TSMC is found guilty of violating these sanctions, it could face severe penalties, including sanctions that could directly impact its chip production for clients like Apple.
Potential consequences include TSMC being barred from accessing U.S. technology and equipment, jeopardizing the production of new chip lines and maintenance of existing ones. This could lead to a shortage of Apple’s mobile chips, forcing the tech giant to seek alternative partners. This situation is particularly concerning considering that TSMC has already started manufacturing A16 chips for Apple at its Phoenix, Arizona facility, marking a return to using U.S.-made chips after nearly a decade. This development was made possible by a $6.6 billion subsidy from the Commerce Department through the Chips Act in April.
This investigation adds to the complexities surrounding TSMC, as it also faces a potential pricing standoff with equipment supplier ASML Holding. TSMC reported record third-quarter revenue of NT$759.69 billion ($23.50 billion), a 39% increase from last year and a 12.8% increase from the previous quarter. However, the outcome of this investigation and its impact on Apple’s chip supply chain remain to be seen. It could significantly disrupt Apple’s production plans and potentially force the company to make adjustments to its sourcing strategies, adding another layer of complexity to an already challenging global semiconductor landscape.