On Wednesday, TSMC stock surged after it reportedly discovered that its chip, manufactured for a specific customer, was found with Huawei products.
The chipmaker’s stock increased by 1.20% to $200.86 apiece in the closed trading session. However, it later dipped by 0.06% to $200.74 per stock after-hours.
According to reports, the discovery might be a potential violation of US sanctions planned to sever the flow of Chinese national technology.
Sources noted that TSMC stopped exports to the customer around mid-October following semiconductors forged for that entity had discovered their way into Huawei devices.
Furthermore, reports noted that the chipmaker has informed the US and Taiwanese governments and is conducting a more in-depth investigation.
On the other hand, it remains uncertain whether the TSMC client acted on Huawei’s behalf or where the client is located.
However, the incident brings fresh attention to recent reports that Washington had contacted the company to inquire if it had manufactured chips for the blacklisted Chinese firm.
Huawei, sanctioned since 2020, cannot conduct business with TSMC or similar chipmakers without a U.S. license.
Over the past year, it has relied on China’s Semiconductor Manufacturing International Corp. for production, including a 7-nanometer chip launched in a Huawei smartphone last August.
US Regulators Demand Responses on TSMC Chip in Huawei Device
The Republican chairman of the US House China Committee sought answers from the Commerce Department and TSMC after discovering a chip in a Huawei device.
Additionally, Republican Representative John Moolenaar, chairman of the House China Select Committee, stated that the presence of TSMC-made chips in Huawei devices signals a significant breakdown in US export control policy and described the situation as a catastrophic failure.
Minister of Economic Affairs J.W. Kuo said on Wednesday that Taiwan respects US shipment control regulations and will ensure this is communicated to TSMC.
Meanwhile, Nvidia relies on TSMC to manufacture its top-performing chips, which have boosted its sales and valuation over the past two years. With the US limiting exports of the firm’s advanced chips to China, Huawei is promoting its accelerators as a local alternative.
