In the text of the annual report, public companies usually assess the risks that can significantly affect their business, Taiwan’s TSMC was no exception. According to it, its own scale of business in contract production of chips does not allow it to reliably control the end use of all products, and therefore the export restrictions imposed by the US authorities are not very effective in practice.
Image Source: TSMC
Let us recall that last year, Canadian experts from TechInsights established that Huawei Technologies could have received 7-nm components prohibited by sanctions from TSMC through a fictitious customer, Sophgo, which it could use in its own Ascend computing accelerators for artificial intelligence systems. Such suspicions led to the introduction of sanctions by the United States against Sophgo.
TSMC’s sincere desire to help US regulators investigate alleged “smuggled” shipments was not enough. The Taiwanese manufacturer was forced to admit that it was unable to fully control the fate of each component it produced. “Despite TSMC’s efforts to comply with all export control regulations and sanctions, there can be no assurance that the company’s business activities will not be found to be inconsistent with the provisions of the law and export control regulations,” the company said in its annual report.
TSMC also mentions in the report the possible negative impact on its business of increased US customs duties imposed by Trump. The rise in prices for the company’s products on the local market could significantly reduce demand and its revenue, thereby jeopardizing business development and the development of new technologies in the future. US sanctions could not only affect TSMC’s ability to supply its products to certain countries, but also cause retaliatory measures that will lead to difficulties in purchasing raw materials and equipment needed to produce chips. TSMC attributes threats to its business not only to potential fines for violating sanctions, but also to the loss of access to subsidies for the construction of its factories in other countries. However, the company’s business has not yet suffered seriously from enhanced export controls and retaliatory actions by interested parties, as noted in the TSMC report.