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TSMC has acknowledged fundamental visibility limitations in its semiconductor supply chain, stating in its latest annual report that it "inherently lacks visibility regarding the downstream use or user of final products." This disclosure relates to an incident where 7 nm chips manufactured for Sophgo were later identified in Huawei's Ascend 910B/C AI accelerators, whose hardware is subject to US export restrictions. The contract foundry outlined its standard process: receiving GDS files through intermediaries, validating technical specifications, creating photomasks, and fabricating wafers without insight into end applications. Subsequent analysis revealed that those very chips matched Huawei's specifications, providing components for approximately one million dual‑chiplet AI accelerator units, with two million dies shipped to Huawei.
The report warns that compliance violations by supply‑chain partners, such as failing to secure proper import, export or re‑export permits, could trigger regulatory investigations and penalties, even when TSMC adheres to its established protocols. US already proposed a $1 billion fine for TSMC. This visibility gap just shows that challenges in semiconductor manufacturing, where complex distribution networks obscure the path between fabrication and deployment, are not easily overcome. Foundries are facing increasing pressure to enhance tracking capabilities despite the inherent limitations of the contract manufacturing model. US sanctions on Chinese companies are growing their walls even higher, and this could mean that sanction-abiding companies might avoid doing business with Chinese entities altogether to avoid getting fined.
View at TechPowerUp Main Site | Source
The report warns that compliance violations by supply‑chain partners, such as failing to secure proper import, export or re‑export permits, could trigger regulatory investigations and penalties, even when TSMC adheres to its established protocols. US already proposed a $1 billion fine for TSMC. This visibility gap just shows that challenges in semiconductor manufacturing, where complex distribution networks obscure the path between fabrication and deployment, are not easily overcome. Foundries are facing increasing pressure to enhance tracking capabilities despite the inherent limitations of the contract manufacturing model. US sanctions on Chinese companies are growing their walls even higher, and this could mean that sanction-abiding companies might avoid doing business with Chinese entities altogether to avoid getting fined.
View at TechPowerUp Main Site | Source
