When a Canadian research company discovered that Huawei Technologies‘ multi-chiplet artificial intelligence (AI) The Ascend 910B processor contained dies manufactured by Taiwan Semiconductor Manufacturing Company (TSMC)it highlighted possible loopholes in U.S. sanctions and China’s persistent efforts to gain access to advanced foundry technologies, analysts say.

“Heavy U.S. sanctions on China’s semiconductor sector have proven porous,” said Arisa Liu, a researcher and director of the Taiwan Economic Research Institute.

This discovery sparked a rush to find explanations for what happened. TSMC has since halted shipments to an unnamed customer after discovering that one of its chips supplied to the customer ended up in a Huawei product, Reuters reported on Wednesday. The chipmaker also informed the U.S. government and Taiwanese authorities about the incident, a possible violation of U.S. export controls, according to Taiwanese state media.

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The TSMC logo in front of one of its facilities in Taichung, Taiwan, December 2, 2019. Photo: Shutterstock alt=The TSMC logo in front of one of its facilities in Taichung, Taiwan, December 2, 2019. Photo: Shutterstock >

In a previous statement, TSMC said it had not supplied Huawei since September 2020. Huawei said it had “not produced any chips through TSMC after the implementation of the changes made by the US Department of Commerce to its (foreign direct product rule) which targeted Huawei in 2020.”

For now, there are more questions than answers. The duration, size and scope of the suspected customer’s cooperation with TSMC remain unknown. The customer’s relationship with Huawei, or even whether it has any relationship with the Chinese telecommunications equipment maker, is also unknown. It is unclear whether the TSMC dies found by TechInsights were integrated into Huawei hardware through the same client.

Analysts say whether Huawei gained access to TSMC’s advanced foundry capabilities directly or through indirect proxies is a sign that tough U.S. semiconductor restrictions targeting China’s national champion are in jeopardy.

TechInsights’ findings remained largely ignored in Chinese official media, although several social media accounts translated and cited foreign media reports.

As Huawei’s Ascend chips have become China’s first AI-focused semiconductors, they are now central to the country’s quest for self-sufficiency. As of this year, the Ascend ecosystem has 40 hardware partners, 1,600 software partners and 2,900 AI application solutions, according to Huawei.

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