tsmc severs ties with singapore firm over huawei chip link
Taipei, Saturday, 11 January 2025.
Taiwan Semiconductor Manufacturing Company (TSMC) has ended its relationship with Singapore-based firm PowerAIR. The decision follows an investigation that revealed PowerAIR supplied AI chips to Huawei, violating US restrictions. TSMC discovered its chips in Huawei’s Ascend 910B processor. This action highlights TSMC’s commitment to adhere to international sanctions and maintain political integrity. The company clarified that the chips were shipped before the US sanctions were enforced. Despite Huawei’s attempts to recruit TSMC engineers with lucrative offers, TSMC continues to scrutinize its transactions closely. This incident underscores the ongoing challenges faced by the semiconductor industry amid geopolitical tensions. TSMC’s decisive move reflects its strategic priorities, balancing revenue interests with compliance obligations. The situation has significant implications for TSMC’s business operations in China, a major revenue source, second only to the US.
Investigation reveals sanctions violation
TSMC has terminated its business relationship with PowerAIR, a Singapore-based company, after discovering its chips in Huawei’s AI processors [1][2]. The investigation revealed PowerAIR, established in September 2023, operated from Singapore’s One Raffles Place with no public contact information or website [3]. This marks TSMC’s second customer termination related to Huawei compliance issues, following a similar action with Sophgo in October 2024 [4].
China revenue impact and market dynamics
Despite US restrictions on selling to major customers like Huawei, China remains TSMC’s second-largest revenue source after the United States. Chinese sales grew 26 percent to $10.4 billion in 2024, representing 11.778 percent of TSMC’s total annual revenue of $88.3 billion [2][5]. This underscores TSMC’s delicate balance between maintaining compliance and preserving crucial market relationships.
Talent recruitment challenges
Huawei has intensified efforts to recruit TSMC engineers by offering triple salaries and additional benefits [1]. The company’s recruitment strategy extends to suppliers of ASML, the sole manufacturer of advanced chip-making machines [1]. These aggressive talent acquisition attempts highlight the ongoing competition for semiconductor expertise amid tightening global restrictions [4].