Taiwan Semi Could Face More Than $1 Billion In US Penalty Over Alleged Huawei Chip Link: Reuters

Taiwan Semiconductor Manufacturing Co TSM is susceptible to a minimum $1 billion fine for Huawei Technologies Co AI processor allegedly procuring its chip.

Lately, the Taiwanese contract chipmaker made around three million chips that matched Sophgo’s design and likely ended up with Huawei, Lennart Heim of RAND’s Technology in Arlington told Reuters.

All three companies have previously denied violation of U.S. embargo norms.

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Taiwan Economy Minister Kuo Jyh-huei told Reuters his ministry did not know of any penalty.

The U.S. Department of Commerce has been investigating Taiwan Semiconductor’s alleged work for China-based Sophgo, Reuters reported, citing unnamed sources familiar with the matter.

Since 2019, the U.S. has restricted Huawei from receiving goods made with U.S. technology, citing national security threats. The Biden administration has also slapped additional semiconductor technology embargoes on China, limiting its access to advanced semiconductor technology, including artificial intelligence technology.

The penalty could reach up to twice the value of transactions that violate the rules.

Trump had criticized Taiwan for allegedly stealing U.S. semiconductor technology, leading to huge trade deficits for Washington. He also blasted Taiwan for the lack of a defense treaty, as the U.S. is a key military backer of Taiwan.

Trump also suggested scrapping U.S. subsidies to chipmakers like Taiwan Semiconductor to build fabs in the country. Last week, the U.S. imposed a 32% levy on imports from Taipei. Trump also warned against potential levies on semiconductors.

In March, Taiwan Semiconductor announced plans to make a fresh $100 billion investment in the U.S., which includes building five additional chip facilities.

Taiwan Semiconductor stock has plunged 30% year-to-date. Steven Tseng of Bloomberg Intelligence expects the tariffs to affect consumer demand, indirectly reducing orders for Taiwan Semiconductor-manufactured chips. Goldman Sachs downgraded Taiwan equities to underweight, citing high exposure to U.S. exports.

Price Action: TSM stock is down 0.40% at $140.80 at the last check on Wednesday.

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