News TSMC says it cannot guarantee that its chips don't end up in China

[Admin]

In its annual report, TSMC acknowledged it cannot fully track how its chips are ultimately used, highlighting ongoing risks of unintentional export control violations.

TSMC says it cannot guarantee that its chips don't end up in China : Read more

 

[A Stoner]

I can understand the point about they cannot control where the chip goes once it gets into the hands of a 2nd party or a third party. They should not be responsible for that.

But they do have control over their risks of this happening. They had already produced that chip before and knew it was a Huawei design, and thus should have known to look at the buyer's background or refused to produce it based on IP rights.

What would they do if someone from AMD came to them with an nVidia chip design and asked them to produce it? My guess is that their patent attorneys would shoot that contract down in a heartbeat or faster. So, why would they allow Huawei's intellectual property to be stolen and produced for a third party without any investigations? They would not, and that investigation happened and they knew what was going on.

Someone in that decision process knew beyond any doubt that the chips were going to Huawei! The whole, oopsie, we did not know absolutely makes zero sense, and the government knows that, which is why they got hit with a significant fine.

I would allow the company to reduce the fine significantly if they handed that person(s) over to the authorities for prosecution. Chances are that they were offered that deal and refused it.

 

[Eximo]

Not quite as straightforward as that. Huawei/HiSilicon isn't responsible for a lot of the IP they use in their chips, they license most of it. If it were a blind order how would they know that one ARM core here belongs to any specific end target? Sounds like they were also making chiplets, they were then assembled into finished products elsewhere.

 

[NinoPino]

But they do have control over their risks of this happening. They had already produced that chip before and knew it was a Huawei design, and thus should have known to look at the buyer's background or refused to produce it based on IP rights.

Your assumption is that the design is exactly the same of the previous produced chips. Imho this is unlikely. For performance reasons and also to obfuscate the design, I suppose the new design have some changes that make a simple comparision very difficult.
The other assumption you do is that TSMC keep an archive of all the designs of hits clients. I think this is simply impossible and contractually they cannot save the client's designs beyond the production time frame.
If anybody have first hand informations on the argument, his opinion is kindly appreciated.

 

[DS426]

So how can TSMC be fined that much when they did not knowingly manufacturer those chips for that end use?

This demonstrates why due process is important as TSMC deserves to be able to defend themselves in court (are they able to appeal this?) Investigations need to be made to identify who mislead TSMC and then that entity is fined. I realize that's not easy or straightforward, but it's not fair or just to TSMC or any node manufacturer that lands into this situation.

 

[Notton]

Yup, there's no such thing as the perfect, impenetrable lock to keep out would-be ill-doers.
You can do all the mitigation and preventative measures in the world, and someone out there will still find a way to sneak in.

Usually the weak chain in the link is the human factor. Humans are not infallible and the only thing you can do is add safeguards to mitigate a small error from becoming a huge one.
And the kicker is, not all errors are predictable, nor preventable.
It's Murphy's law.

 

[wr3zzz]

Sanction avoidiance are no different from money laundering. Banks are not responsible for money laundering of their account holders if the account holders have provided proper legal identification and they monitor transactions and report them based on "government mandated" flags. It's called the safe harbor rules, and the same ideas apply to all industries. Under the principle of safe harbor rules it's up to the government to tell companies specifically what flags they need to monitor and how to act.

The problem with TSMC, and many others now under MAGA, is that Trump doesn't give a crap about legal principles and only about how to exploit the technicalities in the system. He imposes huge government peanlities even if he knows the court will overturn it. Trump uses the threat of penalities and associated legal expenses companies need to defend itself at courts as well as reputational risks to get others to do what he wants. He might call it negotiation but it's really extortion. Unscruplus businesses like Trump Enterpise and despots in banana republics do it all the time using the laws to abuse people with less but very rarely goverments in rich liberal democracies will ignore safe harbor rules for good reasons.

 

[A Stoner]

Your assumption is that the design is exactly the same of the previous produced chips. Imho this is unlikely. For performance reasons and also to obfuscate the design, I suppose the new design have some changes that make a simple comparision very difficult.
The other assumption you do is that TSMC keep an archive of all the designs of hits clients. I think this is simply impossible and contractually they cannot save the client's designs beyond the production time frame.
If anybody have first hand informations on the argument, his opinion is kindly appreciated.

It is the exact same chip...

Here is the original Tom's Hardware post on this. I have bolded and color highlighted the fact they are the exact same chip. Intellectual Property rights alone should have prevented this from happening if it was not done on purpose by TSMC.

Huawei's original HiSilicon Ascend 910, which was launched in 2019, consists of a Virtuvian AI chiplet, a Nimbus V3 I/O die, four HBM2E memory stacks, and two dummy dies. TSMC produced Virtuvian chiplets for Huawei from 2019 to September 2020, using its N7+ process technology, a 7nm-class node with some EUV layers.

After the U.S. government put Huawei on its Entity List in 2020, Huawei had to redesign its Virtuvian chiplet to make it at SMIC, which used its N+1 technology (1st Generation 7nm-class process) to build it. GPUs with the new Virtuvian chiplet are called HiSilicon Ascend 910B and have nothing to do with TSMC.

Later, Huawei developed a more sophisticated version of its Virtuvian chiplet for its Ascend 910C, which SMIC makes using its 2nd Generation 7nm fabrication technology (N+2). Contrary to the report, the Ascend 910C has only one compute chiplet. Again, the Ascend 910C has nothing to do with TSMC. As Huawei managed to deceive TSMC, the latter produced the original Ascend 910 chiplet for the company in 2023 – 2024, as discovered by TechInsights.

 

[hannibal]

The "good" part is that eventually we pay those fines as increased prices for our computer and phone parts...

So... Congratulations to all of us who needs new electronic in coming years.

 

[Charles Cabbage]

Punishment is easy. Solutions are hard.

Ironically, being focused on looking tough against China is sabotaging the American tech edge; TSMC's significantly increased compliance costs and delays will obviously be passed on to their majority-US customers. A real "cutting off your nose to spite your face" situation.

 

[craigss]

Am sorry but this is ridiculous, how can a small minded man baby dictate to a private foreign company where they can and cannot supply products, can you imagine the absolute destruction should TSMC turn around and tell Trump look we disagree we are discounting products to banned countries and adding 150% to the prices of your imports, its time the whole world told this dictator to go screw
If I buy a product and then export it elsewhere how can my supplier be held responsible just how?
He is sending the whole world into a spiral of uncertainty and downfall including his own nation

 

[NinoPino]

Am sorry but this is ridiculous, how can a small minded man baby dictate to a private foreign company where they can and cannot supply products, can you imagine the absolute destruction should TSMC turn around and tell Trump look we disagree we are discounting products to banned countries and adding 150% to the prices of your imports, its time the whole world told this dictator to go screw
If I buy a product and then export it elsewhere how can my supplier be held responsible just how?
He is sending the whole world into a spiral of uncertainty and downfall including his own nation

Agree with you on the fact that this should not be possible in a free world.
But Trump is absolutely not a dictator, he was regularly elected, and in charge of presidence he is trying to do the best for his country. The sanctions are imposed by the U.S.A., not by Trump.

 

[craigss]

Lol dude wake up and smell the bull crap

Key Findings​

• President Trump has threatened to impose International Emergency Economic Powers Act (IEEPA) tariffs on Canada, Mexico, and China related to fentanyl; national security tariffs on autos, auto parts, steel, and aluminum from all countries; and IEEPA tariffs on all countries related to an economic national emergency.
• The weighted average applied tariff rate on all imports will rise to 25.8 percent under the tariffs and exemptions currently in effect. The average effective tariff rate, reflecting how much tariff revenue the new tariffs will raise after incorporating behavioral responses, such as imports falling in response to higher tariffs, will rise to 11.3 percent under the current tariffs—the highest average rate since 1943. We estimate tariffs will cause imports to fall by nearly $800 billion in 2025, or 23 percent.
• The April 2 so-called reciprocal tariffs will raise $1.0 trillion in revenue over the next decade if the 90-day pause ends as scheduled, excluding Canada and Mexico. The April 2 escalation comes in addition to previously imposed tariffs, which will raise $1.1 trillion in revenue over the next decade. Notably, we estimate the tariffs on China will raise comparatively little revenue as rates of 145 percent on most imports significantly reduce imports from China.
• Altogether, Trump’s tariffs will raise $2.1 trillion in revenue over the next decade on a conventional basis ($1.5 trillion on a dynamic basis) and reduce US GDP by 0.8 percent, all before foreign retaliation. Including foreign retaliation announced as of April 10, the tariffs reduce US GDP by 1.0 percent.
• The tariffs will reduce after-tax income by an average of 1.2 percent and amount to an average tax increase of $1,243 per US household in 2025. Our estimates of reductions in after-tax income may understate the harm to consumers by loss of choice as tariffs reach prohibitive rates.
• As of April 4, China, Canada, and the European Union have announced or imposed retaliatory tariffs altogether affecting $330 billion of US exports. Imposed and threatened retaliation as of April 10 will reduce US GDP by another 0.2 percent and 10-year revenue by $132 billion on a dynamic basis.
• In 2025, Trump’s tariffs will increase federal tax revenues by $166.6 billion, or 0.55 percent of GDP, making the tariffs the largest tax hike since 1993. The tariffs are larger than the tax increases enacted under Presidents George H.W. Bush and Barack Obama.
• The first Trump administration imposed tariffs on thousands of products valued at approximately $380 billion in 2018 and 2019. The “reciprocal” tariffs affect approximately $1.3 trillion of imports from China, the EU, and nearly all other trading partners, excluding Canada and Mexico; the fentanyl tariffs affect all imports from China and non-USMCA imports from Canada and Mexico; and product-specific tariffs affect another $518 billion of steel, aluminum, derivatives, and autos (with some overlap with the fentanyl tariffs). In all, we estimate more than $2.3 trillion, or 71 percent, of US imports face new tariffs.

 

[rambo919]

Uhm.... how is it that some people still don't realize that the point of the tariffs not the tariffs themselves but as temporary nudges to achieve long term strategies? Unless you understand the desired end goal the minor thrusts of the tariff sword in themselves will obviously make no sense to you.... they were never supposed to.

Also such market fluctuations have been a constant for decades.... funnily perhaps everyone is freaking out because for the first time they are affecting the US as well.... in which case the popcorn tastes all the better because of how self centered all the outrage is.

This is not the actions of a "dictator", it's the actions of a president that's actually doing something for once other than what some bureaucracy or other tells him to do, it's beautiful and highly entertaining to witness from the outside.

 

[craigss]

So returning the USA to isolationism is funny?
Some breaking news this will force the rest of the world to band together and will leave the US out in the cold, it's already happening there is widespread rejection of US goods abroad.
It's like trump's running his own business with nobody to steady or guide him

 

[rambo919]

So returning the USA to isolationism is funny?

No, hysterical reactions are. Its the end of the world we are all going to die dooom dooom dooom bleh.

Some breaking news this will force the rest of the world to band together and will leave the US out in the cold, it's already happening there is widespread rejection of US goods abroad.
It's like trump's and running his own business with nobody to steady it guide him

No this will force everyone globally to re-nationalize a lot of industries because of how important the US market is. Sure things will shift but the globalism economy was unsustainable to begin with.... a controlled shift is much preferable to a total random systemic collapse.

Sure it mostly works atm but it's way too fragile for anyone's long term comfort. Nvm how the globalism economy by definition progressively encroaches on national sovereignty with the overpaid lawyer as foot soldier.

And yes whether anyone wants to hear it or not it is a MASSIVE strategic vulnerability to rely on a geopolitical rival for core industry.... in other words ludicrously insanely stupid. What people don't want to accept is current US wealth is a bubble... and it will be popped either internally and controlled or externally and uncontrolled. It is not natural for a country to be this wealthy for long on outsourced industries... it cannot last forever.

 

[thekingofALLmonkz]

Taiwanese inefficiency is a plague

 

[kylothow]

No, hysterical reactions are. Its the end of the world we are all going to die dooom dooom dooom bleh.


No this will force everyone globally to re-nationalize a lot of industries because of how important the US market is. Sure things will shift but the globalism economy was unsustainable to begin with.... a controlled shift is much preferable to a total random systemic collapse.

Sure it mostly works atm but it's way too fragile for anyone's long term comfort. Nvm how the globalism economy by definition progressively encroaches on national sovereignty with the overpaid lawyer as foot soldier.

And yes whether anyone wants to hear it or not it is a MASSIVE strategic vulnerability to rely on a geopolitical rival for core industry.... in other words ludicrously insanely stupid. What people don't want to accept is current US wealth is a bubble... and it will be popped either internally and controlled or externally and uncontrolled. It is not natural for a country to be this wealthy for long on outsourced industries... it cannot last forever.

You know that saying something insane a bunch of times doesn't make it any less insane or wrong?
That Kool-Aid must be really banging 😎

 

[DS426]

Sanction avoidiance are no different from money laundering. Banks are not responsible for money laundering of their account holders if the account holders have provided proper legal identification and they monitor transactions and report them based on "government mandated" flags. It's called the safe harbor rules, and the same ideas apply to all industries. Under the principle of safe harbor rules it's up to the government to tell companies specifically what flags they need to monitor and how to act.

The problem with TSMC, and many others now under MAGA, is that Trump doesn't give a crap about legal principles and only about how to exploit the technicalities in the system. He imposes huge government peanlities even if he knows the court will overturn it. Trump uses the threat of penalities and associated legal expenses companies need to defend itself at courts as well as reputational risks to get others to do what he wants. He might call it negotiation but it's really extortion. Unscruplus businesses like Trump Enterpise and despots in banana republics do it all the time using the laws to abuse people with less but very rarely goverments in rich liberal democracies will ignore safe harbor rules for good reasons.

You turned this into being about Trump? First off, we don't like talking politics here, and secondly, I imagine this would have happened under the previous administration where most of these chip export limitations were setup.

 

[namehere]

TSMC is an independent company, not even a US one, not a government agency, what happened to free trade and no government interference with business? Microsoft has a long T&C contract that includes not selling its products to some countries, as do all semiconductor makers and if these were followed, cell phones would not be available in many countries, nor would computers, so this idea that products can be stopped from export is just a publicity stunt.
The US should stick to wrecking its own economy and not trying to control the world, TSMC should tell them to get lost. Clinton tried attacking China, so did Bush, Obama, Biden and all it does is spur those countries attacked to grow their own products.
Bullying doesn't work, it makes the rest of the world see the US can't be trusted which is why only the EU still trades with the USA as its main trading partner, the rest of the world has moved to China

 

[rambo919]

You know that saying something insane a bunch of times doesn't make it any less insane or wrong?
That Kool-Aid must be really banging 😎

First They Ignore You, Then They Laugh at You, Then They Attack You, Then You Win.

The Soviets actually put critics into insane asylums..... good luck with that strategy.

 

[rambo919]

what happened to free trade

When people speak of "free trade" it is often in religious tones.... no one is limiting freedom of trade, the costs of trade are being altered. They are still free to trade with anyone.

 

[jp7189]

Sanction avoidiance are no different from money laundering. Banks are not responsible for money laundering of their account holders if the account holders have provided proper legal identification and they monitor transactions and report them based on "government mandated" flags. It's called the safe harbor rules, and the same ideas apply to all industries. Under the principle of safe harbor rules it's up to the government to tell companies specifically what flags they need to monitor and how to act.

The problem with TSMC, and many others now under MAGA, is that Trump doesn't give a crap about legal principles and only about how to exploit the technicalities in the system. He imposes huge government peanlities even if he knows the court will overturn it. Trump uses the threat of penalities and associated legal expenses companies need to defend itself at courts as well as reputational risks to get others to do what he wants. He might call it negotiation but it's really extortion. Unscruplus businesses like Trump Enterpise and despots in banana republics do it all the time using the laws to abuse people with less but very rarely goverments in rich liberal democracies will ignore safe harbor rules for good reasons.

I like the theory of your argument, but the reality is this did happen and shouldn't have. The banking industry has had many abuses and years to figure out balanced rules, not so much in the chip industry.

If some peanut company comes out of the blue with a multi billion dollar order for millions of chips that contain a Huawei design which TSMC has intimate knowledge of, they might have put a pause on that instead of doing the greedy business thing.

Like banking (or any other business) if the industry can't regulate itself and show good judgement, then they can expect a government body to come in with fines and eventually <unnecessarily > beauracratic rules.

 

[WhteTrash]

I feel like we see this kind of news from times to times but reframed differently years after years.

I don't see how the US is expecting to stop a country like China to surpass them sonner or later. Their population alone is bigger than some continents and they graduate more engineers each year than the whole west combined.

Now we got to the point where they are decoupling from western technology but at the same time Western-aligned companies such as Nvidia, TSMC and Intel don't want to lose that market and are doing everything they can to still cashout in the loopholes.

Sounds like a win-win situation for China right now.