In a significant development amidst the ongoing US-China tech rivalry, Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, has halted shipments to two firms suspected of having ties to Chinese smartphone giant Huawei Technologies Co. The move, which has raised concerns about potential violations of US export sanctions, underscores the escalating geopolitical tensions surrounding the global semiconductor industry.
According to reports from Nikkei Asia and Taiwan News, the two firms in question had ordered chips built on TSMC’s advanced 7nm process, raising red flags due to the significant order volumes. TSMC has emphasized its strict compliance with regulations and stated that it actively investigates and communicates with partners whenever regulatory concerns arise.
The situation is further complicated by the involvement of Bitmain, a leading bitcoin mining hardware manufacturer. Block Tempo reports that Bitmain may have acquired TSMC’s 7nm chips and transferred them to Huawei, which has been subject to a US export ban since 2019. Following suspicions of a potential breach of US sanctions, TSMC halted shipments to Sophgo, a subsidiary of Bitmain, after Huawei’s Ascend 910B AI chip, reportedly containing TSMC-made components, surfaced.
This development poses a significant challenge for Bitmain’s supply chain, potentially impacting the entire mining industry. Restrictions on Bitmain’s access to high-demand mining chips could lead to a decline in ASIC chip shipments and inventory, potentially slowing Bitcoin’s computational power growth.
While Bitmain and its subsidiary, Computing Energy Technology, deny any connection with Huawei or violations of US sanctions, insiders within Taiwan’s semiconductor industry suspect that intermediaries may have purchased TSMC chips through various channels, potentially redirecting them to Huawei.
The situation highlights the critical role TSMC plays in the global tech landscape, with China being a significant market for the company. Before 2020, when Huawei was a key client, China contributed nearly 20% of TSMC’s sales, a figure that has since dropped to over 10%.
The escalating geopolitical tensions have also drawn attention to TSMC’s position in the global supply chain, particularly in the wake of former US President Donald Trump’s repeated criticisms of the company. Trump has accused TSMC of weakening the US chip industry and has even threatened to impose tariffs on Taiwanese chips if he were to return to office. These statements have contributed to uncertainties surrounding TSMC’s future and have caused fluctuations in its stock price.
While TSMC has navigated through these challenges, the recent developments emphasize the complexities of the global semiconductor supply chain and the role of geopolitical factors in shaping the industry’s landscape. As tensions between the US and China continue to escalate, the future of TSMC’s business and the broader chip industry remains uncertain.
