The U.S. Department of Commerce has initiated an investigation into Taiwan Semiconductor Manufacturing Company (TSMC), a major supplier to companies like Apple and Nvidia, to determine whether it has indirectly supplied chips to Huawei or other restricted entities, potentially violating U.S. federal laws.

According to sources reported by The Information, TSMC may have been producing or selling chips to Huawei, which is subject to U.S. sanctions. These sanctions, in place since 2020, restrict any non-Chinese company from providing Huawei with advanced chips if they are produced using U.S. equipment. A violation could lead to significant legal consequences for TSMC.

The Commerce Department has reached out to TSMC for clarification, particularly regarding the production of AI chips, which are subject to stringent U.S. export regulations. These rules aim to limit the export of advanced technologies to certain foreign entities due to national security concerns.

In response, TSMC stated that it complies with U.S. laws, saying, "If we have any reason to believe there are potential issues, we will take immediate action to ensure compliance, including conducting investigations and communicating with relevant parties."

The investigation also explores whether Huawei may have indirectly acquired chips through intermediaries or third-party companies, and whether TSMC has implemented sufficient due diligence to avoid such transactions.

Huawei has been under U.S. scrutiny since 2017, and the investigation highlights the ongoing challenges in enforcing export controls in the global semiconductor industry.