TSMC, the world’s biggest contract chipmaker, announced its plans on Friday just hours before the Trump administration outlined a proposal to amend tech export rules that could restrict TSMC‘s sales to Huawei, which is blacklisted by the United States because it is considered a national security threat.
The new rule, unveiled by the Commerce Department and first reported by Reuters, expands U.S. authority to require licenses for sales to Huawei of semiconductors made abroad with U.S. technology, vastly expanding Washington’s reach to halt exports to the world’s No. 2 smartphone maker.
“There’s no assurance whatsoever on that,” Keith Krach, the U.S. undersecretary for economic growth, energy and the environment, told reporters in a call, when asked if TSMC was assured about a license.
“I think roughly around 10-12% of TMSC’s business is China, and I think that is in essence almost primarily Huawei,” Krach said. “So they will be restricted unless they’re granted a license, and there is no assurances on that and we don’t anticipate that.”
Earlier, TSMC said it was working with outside counsel to interpret the rules in good time and maintain long-term collaborations with equipment partners around the world.
Krach has urged U.S. allies and partners to join Washington in aligning their domestic export control laws to address “the very real security threat” posed by Huawei and China.
He did not spell out what the potential incentives would be for TSMC, but said the administration will help make the company be successful in its investment. “In terms of incentives, I know there is a number of things the U.S. Congress is looking at. I think … there are some really good possibilities coming down the road,” Krach said.
Huawei, which needs semiconductors for its smartphones and telecoms equipment, has found itself at the heart of a battle for global technological dominance between the United States and China. The relationship between the world’s two largest economies has soured in recent months over the origins of the deadly coronavirus.