Taiwan Semiconductor Confronts Challenges Of US Chips Sanction On China

Taiwan Semiconductor Manufacturing Co TSM disclosed in its 2024 annual report last week that the U.S. semiconductor technology embargo challenged its ability to ensure complete compliance with the rules.

The Taiwanese contract chipmaker also held the semiconductor sanctions responsible for leading to higher violations of semiconductor sanctions by business partners to gain access to the advanced technology.

Taiwan Semiconductor disclosed it could not guarantee complete compliance.

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Taiwan Semiconductor partners Qualcomm Inc QCOM and MediaTek Inc co-developed mobile chips for phone makers, including Xiaomi Corp XIACF XIACY, as per a Bloomberg report. However, a 2024 report by TechInsights revealed the presence of Taiwan Semiconductor technology in Huawei Technology’s Ascend 910B AI chip.

The U.S. has restricted Huawei’s access to advanced semiconductor technology since 2020, citing national security threats.

Taiwan Semiconductor disclosed in its annual report that it took every precaution, including restricting shipment to its trading partners, to ensure compliance with the U.S. sanctions.

Taiwan Semiconductor’s first-quarter revenue rose 41.6% to $25.53 billion, topping the analyst consensus estimate of $23.92 billion, despite a smartphone seasonality impact on sales.

The second-quarter revenue guidance predicts $28.4 billion-$29.2 billion versus the $26.79 billion analyst estimate, with strong demand for 3-nm and 5-nm technologies.

In March, Taiwan Semiconductor announced an additional $100 billion investment in U.S. chipmaking (on top of $65 billion in April 2024). The investment followed President Donald Trump’s verbal attacks on Taiwan “for stealing” the U.S. semiconductor business and generating massive trade deficits for Washington.

Price Action: TSM stock is down by 1.91% to $148.85 premarket at the last check Monday.

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