TSMC Struggles to Limit Access to Chips

Taiwan Semiconductor Manufacturing Co. said it faces difficulties in tracking which companies use its chips. The company said there is limited visibility in the overall supply chain to keep its silicon out of products made by sanctioned companies.

In its 2024 annual report, TSMC noted its role in the chip supply chain inherently limits its visibility and information available to it regarding the downstream use or user of final products equipped with its chips. It added this constraint impedes its ability to ensure chips it makes will not be diverted to unintended end-use and end-users, including potential business partners or third parties with an intent of circumvention.

The statement explained that if a business partner fails to obtain appropriate import, export, or re-export licenses or is found to have violated applicable export control or sanctions law, TSMC may be adversely affected. The US Department of Commerce ordered TSMC to halt shipments of advanced chips used to support AI workloads to Chinese companies. The restrictions cover 7nm and more advanced designs used in AI accelerators and GPUs. In October 2024, the company was forced to stop shipping chips made for a China-based customer after discovering the components ended up on a Huawei processor.