US Investigates Whether TSMC Has Really Cut Ties With Huawei

“A big issue has recently happened in the technology community. TSMC, a well known 'big brother' in the chip-making sector, has split up with Chinese technology giant Huawei and will no longer make chips for Huawei,” the writer says.

“The duo were close partners in the past. But now TSMC has decided to expand its investment in the US and leave Huawei alone,” he says.“It is possible that some of the 5G and Ascend chips that are still being used by Huawei now were made by TSMC. When Huawei runs out of these chips, it will have to make them domestically.”

He says it's not easy for Chinese chipmakers to catch up with TSMC as China is not allowed to import extreme ultraviolet (EUV) or the mainstream deep ultraviolet (DUV) lithography machines.

“Originally Huawei and TSMC had had a very close partnership. But things have become complicated after the US intervened,” a Jiangsu-based writer using the pseudonym“Summer” says in an article published on October 15.

“For a long time, TSMC had not cut off its relationship with Huawei and kept begging the US to allow it to continue this relationship,” he says.“But finally, TSMC chose to partner with Amkor Technology and completely terminate its cooperation with Huawei.”

He adds that the split-up of TSMC and Huawei may not be a bad thing as both firms can look for new opportunities while Chinese chip makers will get more contracts from Huawei.

On July 26, the US Commerce Department and Amkor Technology signed a non-binding preliminary memorandum of terms saying that the government will provide Amkor up to US$400 million in proposed direct funding under the CHIPS and Science Act.

The funding will support Amkor's investment of approximately US$2 billion and create 2,000 jobs in a project in Peoria, Arizona, the Biden administration said in a statement.

“Companies such as TSMC, Apple and GlobalFoundries will be able to package and test their essential chips domestically, enabling the full end-to-end cycle of the chip manufacturing process to occur in the US,” it said.

As chip design approaches the technical limits of Moore's Law, which suggests that the number of transistors on a semiconductor doubles every two years, advanced packaging is widely believed to be the next frontier of innovation in the industry through its ability to drive enhanced power and performance, it added.

On October 4, TSMC and Amkor signed a memorandum of understanding on collaborating to bring advanced packaging and test capabilities to Arizona.

The close collaboration and proximity of TSMC's front-end fab and Amkor's back-end facility will accelerate overall product cycle times, the two companies said in a joint press release.

Industry analysts said the new partnership between TSMC and Amkor is a win-win situation as they can join hands to win contracts, especially in the area of AI chip manufacturing.

TSMC is building two advanced fabs in Arizona. The first one will commence operation to make 4 nanometer chips in the first half of next year. The second will start producing 2nm and 3nm chips in 2028. TSMC has also announced a plan to build a third fab in Arizona, aiming to make 2nm chips in 2030.

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Amkor is the world's second largest outsourced semiconductor assembly and test company by revenue after the Taiwan-based ASE Technology Holding Co Ltd. Its major customers include Apple and Siemens.

Kirin 9000 chips

In May 2019, the US Commerce Department put Huawei and its 70 affiliates on its so-called Entity List on national security grounds. On September 15, 2020, TSMC stopped producing Kirin chips, resulting in a countdown for HiSilicon's chip inventory.

Some Chinese media said TSMC could have shipped about 30 million units of the 5nm Kirin 9000 chips in its last shipment to mainland China.

In the third quarter of 2022, HiSilicon should have depleted all of its inventory as it saw a zero share in the global smartphone chipset market.

But last December, Huawei's newly-launched Qingyun L540 laptop used a Kirin chip called 9006C, which was later found to be a modified Kirin 9000 chip made by TSMC in 2020. It's unclear whether HiSilicon still has an inventory of Kirin 9000 chips.

The Commerce Department's latest probe is expected to check whether any of the Kirin 9000 chips in the so-called“last shipment” were delivered after the deadline of September 15, 2020.

Read: Huawei struggling to make enough chips for Mate70

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