TSMC has reportedly terminated its relationship with Singapore-based PowerAIR following a client review sparked by concerns over the supply of chips to Huawei. This decision is a new development in the ongoing tensions between TSMC and the Chinese tech giant regarding chip technology.
Background of the Conflict
The conflict began when Huawei was discovered to be using TSMC-manufactured chips in its AI processors. This discovery prompted the US to investigate how the chips were delivered to Huawei. In response, TSMC has been scrutinizing its clients in China and beyond.
PowerAIR Targeted After Sophgo
TSMC's action against PowerAIR follows a similar move against China's Sophgo last month. TSMC suspected Sophgo of supplying its processors to Huawei, leading to a severing of ties. Now, PowerAIR, a Singaporean firm specializing in operational and engineering design, has been identified as a potential breach of US export controls.
Investigation Impact
Sources indicate that PowerAIR was flagged for potential breaches after a client review by TSMC, leading to the restriction of chip supplies. Details beyond this are currently limited, but there is suspicion of PowerAIR's involvement in the Huawei chip case, similar to what was alleged about Sophgo.
Wider Impact on Chinese AI Chip Startups
TSMC's increased scrutiny on its Chinese clients has had a wide impact, particularly on AI chip design startups. Companies like Enflame, MetaX, and Iluvatar Corex are reportedly experiencing difficulties due to the intensified investigation. This is believed to be a result of the pressure from the US on TSMC to restrict chip access to Huawei.
TSMC's Balancing Act
Despite these actions, China remains a significant source of revenue for TSMC, second only to the US. Therefore, a complete halt to chip supplies to China is unlikely. The current restrictions are likely to persist until TSMC determines the full extent of how its chips ended up in Huawei’s AI products.
