Taiwan Semiconductor Manufacturing Company

US suspects TSMC helped Huawei skirt export controls, report says

5G, AI chips, Apple, Artificial Intelligence, china tariffs, Chips Act, Export controls, Huawei, NVIDIA, Policy, qualcomm, semiconductors, Taiwan Semiconductor Manufacturing Company, TSMC / Kris Guyer / October 18, 2024

In April, TSMC was provided with $6.6 billion in direct CHIPS Act funding to “support TSMC’s investment of more than $65 billion in three greenfield leading-edge fabs in Phoenix, Arizona, which will manufacture the world’s most advanced semiconductors,” the Department of Commerce said.

These investments are key to the Biden-Harris administration’s mission of strengthening “economic and national security by providing a reliable domestic supply of the chips that will underpin the future economy, powering the AI boom and other fast-growing industries like consumer electronics, automotive, Internet of Things, and high-performance computing,” the department noted. And in particular, the funding will help America “maintain our competitive edge” in artificial intelligence, the department said.

It likely wouldn’t make sense to prop TSMC up to help the US “onshore the critical hardware manufacturing capabilities that underpin AI’s deep language learning algorithms and inferencing techniques,” to then limit access to US-made tech. TSMC’s Arizona fabs are supposed to support companies like Apple, Nvidia, and Qualcomm and enable them to “compete effectively,” the Department of Commerce said.

Currently, it’s unclear where the US probe into TSMC will go or whether a damaging finding could potentially impact TSMC’s CHIPS funding.

Last fall, the Department of Commerce published a final rule, though, designed to “prevent CHIPS funds from being used to directly or indirectly benefit foreign countries of concern,” such as China.

If the US suspected that TSMC was aiding Huawei’s AI chip manufacturing, the company could be perceived as avoiding CHIPS guardrails prohibiting TSMC from “knowingly engaging in any joint research or technology licensing effort with a foreign entity of concern that relates to a technology or product that raises national security concerns.”

Violating this “technology clawback” provision of the final rule risks “the full amount” of CHIPS Act funding being “recovered” by the Department of Commerce. That outcome seems unlikely, though, given that TSMC has been awarded more funding than any other recipient apart from Intel.

The Department of Commerce declined Ars’ request to comment on whether TSMC’s CHIPS Act funding could be impacted by their reported probe.

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TSMC predicts delays, less advanced chips at second Arizona fab

arizona, chips fab, chips shortage, Policy, semiconductors, Taiwan Semiconductor Manufacturing Company, TSMC / Rejus Almole / January 18, 2024

Enlarge / US President Joe Biden speaks during a “First Tool-In” ceremony at the Taiwan Semiconductor Manufacturing Co. facility under construction in Phoenix, Arizona, US, on Tuesday, Dec. 6, 2022. TSMC today announced plans to boost its investment in the state to $40 billion and construct a second production facility, following major customers urging the Taiwanese chipmaker to build more advanced semiconductors in the US.

President Joe Biden’s plan to expand America’s command of the global chips market hit another setback Thursday when Taiwan Semiconductor Manufacturing Company (TSMC) Chairman Mark Liu announced that he anticipates significant delays at the company’s second chips plant in Arizona.

This news follows previous delays announced last year at TSMC’s first chips plant, which Liu partly blamed on US workers lacking specialized skills. At Thursday’s news conference, Liu “reiterated” those complaints, Bloomberg reported, claiming that TSMC is still struggling to hire skilled workers in Arizona.

According to Liu, TSMC’s second Arizona plant—which is supposed to become the most advanced facility in the US—likely won’t start volume production of advanced chips until 2027 or 2028. That’s potentially two years longer than initial projections suggesting that production would start in 2026.

Such lengthy delays, Bloomberg noted, might be “time enough for semiconductor tech to advance by one generation.” If that’s the case, one of the country’s biggest foreign investments ever might result in the US still lagging behind foreign chips competitors.

Liu also suggested that the second plant, even with delays, might not start producing the 3-nanometer chip that TSMC had earlier stated would be possible in 2026. This 3-nm chip is “among the most advanced” chips manufactured today, The Wall Street Journal noted, but Liu said that until TSMC could calculate “customer demand and government incentives,” the chipmaker wouldn’t be able to determine “the specific chip type” that the second plant would begin producing as late as 2028.

TSMC’s delays could be due to a lack of Chips Act funding, Bloomberg suggested, pointing out that none of the leading chip manufacturers ramping up efforts in the US today have been approved for funding yet by the Department of Commerce.

Last month, Commerce Secretary Gina Raimondo confirmed that the US had not yet awarded grants to commercial semiconductor facilities like TSMC because selecting a defense contractor first “was meant to emphasize the administration’s focus on national security,” The New York Times reported. By funding BAE Systems, the Biden administration was likely moving quickly to decrease reliance on China-based chip supply chains for military purposes amid growing tensions between the two countries.

“When we talk about supply chain resilience, this investment is about shoring up that resilience and ensuring that the chips are delivered when our military needs them,” Jake Sullivan, President Biden’s national security adviser, said last month.

If the US announced funding for TSMC, that could ensure that the second Arizona chips plant would be operational by 2027 rather than 2028. According to Bloomberg, TSMC announced it was building a “more modest plant” in Japan that’s on track to launch operations this year after the Japanese government promptly provided funding.

In December, Raimondo promised that “much larger grants for major semiconductor manufacturing facilities run by companies like Intel, Samsung,” or TSMC would be announced “in the coming months.” She also confirmed that the “pace” of announcing awards would speed up in the first half of 2024.

Liu said that TSMC is in “consistent communication with the US government on incentive and tax credit support” in Arizona, the Journal reported.

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