TSMC chips reportedly ended up at Huawei. It raises concerns about 'shadow networks' bypassing US sanctions.

Core Viewpoint - TSMC has halted shipments to a client after its chips were discovered in Huawei products, raising concerns about compliance with US export controls and the existence of a "shadow network" for chip supply [1][4][6]. TSMC's Actions - TSMC stopped all shipments to Huawei after September 15, 2020, and has communicated with the US Commerce Department regarding the situation [5][6]. - The company claims to be law-abiding and committed to complying with all applicable rules and regulations, including export controls [6]. Regulatory Context - TSMC and other chipmakers are prohibited from doing business with Huawei without US government approval due to sanctions aimed at limiting Huawei's technological capabilities, particularly in 5G and AI [4][10]. - The US Commerce Department is aware of reports alleging potential violations of export controls and is investigating TSMC's compliance [10]. Industry Implications - The incident raises questions about supply chain transparency and could lead to increased scrutiny of export controls and supply chains for companies involved in sensitive technology [4][8][9]. - Analysts express concern that if TSMC is found to have breached export controls, it could face penalties affecting its access to US technology, impacting major clients like Apple and Nvidia [9]. Shadow Network Concerns - The situation highlights the potential existence of a "shadow network" through which Huawei may be obtaining advanced chips despite being blacklisted since 2020 [6][11]. - Researchers emphasize the need for better understanding of Huawei's network to improve due diligence and prevent similar issues for other chip manufacturers [6][7].