US suspects TSMC helped curb Huawei skirt exports, report says

In April, TSMC was awarded $6.6 billion in direct CHIPS Act funding to support TSMC's $65 billion-plus investment in three greenfield lead-edge fabs in Phoenix, Arizona, which will produce the world's most advanced semiconductors, the Commerce Department said.

These investments provide a reliable domestic supply of chips that will power the economy of the future, fuel the AI ​​boom, and power consumer electronics, automotive, the Internet of Things, and high-performance computing,” the Biden-Harris administration said. And in particular, the funding will help America “maintain our competitive edge” in artificial intelligence, the department said.

It probably wouldn't make sense to help TSMC “offshore critical hardware manufacturing capabilities that underpin AI's deep language learning algorithms and inference techniques” to limit access to US-made technology. TSMC's Arizona fabs will support companies like Apple, Nvidia and Qualcomm and enable them to “compete effectively,” the Commerce Department said.

Currently, it is unclear where the US investigation into TSMC will lead or whether the damaging findings could potentially affect TSMC's chips funding.

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

If the U.S. suspects that TSMC is helping to develop Huawei's AI chips, the company could be considered for avoiding the Chips Girdle, which allows TSMC to “knowingly engage in joint research or technology licensing efforts with any foreign entity that is related to technology or products.” Raises national security concerns.”

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

The Commerce Department declined Ars' request for comment on whether TSMC's CHIPS Act funding might be affected by its reported investigation.