Key components produced by a leading Taiwanese chipmaker were found in a powerful AI chip from a Chinese company, according to an initial report from a semiconductor research firm, which experts say could violate U.S. export controls.
U.S. officials have been briefed on the research, according to a source familiar with the issue who requested anonymity to discuss private matters. The research details a breakdown of an AI chip produced for the Chinese company Enflame. After it took the Enflame processor apart, the research firm TechInsights said on its website, it found that key chip components had been manufactured by Taiwan Semiconductor Manufacturing Co. (TSMC).
Over the past several years, the U.S. has imposed tight restrictions on what AI-related products can be sold to Chinese companies or companies operating in China, a move intended to maintain America’s lead in AI development. Chips provide the computing power necessary to create and run AI systems, and their limited supply has acted as a bottleneck for China’s AI industry.
The trade rules, established by the Commerce Department, determine where and how a chip can be exported based on such metrics as the number of computing calculations it can perform per second and its computing power relative to its size.
The Enflame S60 chip would be powerful enough to be subject to those export restrictions, TechInsights appeared to conclude, based on its initial analysis. The export control classification potentially makes the chip’s sale to Chinese AI companies illegal from late 2022 onward, experts say. According to several Chinese newspapers, at least one of which is state-affiliated, Enflame S60 chips were manufactured in 2024.
TechInsights says it classifies export control details, also called ECCNs, based on information from manufacturers or third-party suppliers or on “information available at the time of analysis.” In the same disclaimer, TechInsights notes that its inferences and conclusions are not final regulatory decisions.
Shortly after NBC News sent its request for comment to TechInsights, the publicly viewable classification was changed to “TBD” before it was removed from the website entirely.
“The technical analysis of the Enflame S60 are ongoing and not complete,” TechInsights spokesperson Graham Butler wrote in response to a request for comment. “We will temporarily place an ECCN based on the preliminary report findings. These are subject to change as reports are finalised.” TechInsights declined to provide the full report to NBC News. TSMC told NBC News that the classification originally applied by TechInsights was incorrect.
Since 2022, the U.S. has asserted that its export controls apply to certain AI-related “items made with the use of U.S. technology, software, or tools” destined for China, even if the items themselves are manufactured outside the U.S. That determination includes essentially all AI chips, given that American technology is used in the machines that manufacture chips.
Under the U.S. export rules, which have been expanded to apply to chips that are destined for countries beyond China to address smuggling fears, TSMC has been banned from shipping cutting-edge chips meant for AI purposes to Chinese companies without specific export licenses.
TSMC fabricates the majority of the world’s AI chips because of its expertise with the unique and intricate manufacturing techniques required to create semiconductor-dense chips.
“We have reviewed a certain third-party analysis report claiming a particular chip manufactured by TSMC is classified as a controlled AI chip,” a TSMC spokesperson wrote in reply to a request for comment about the new research regarding the Enflame S60.
“Based on its technical features and applications, this chip does not meet the criteria for classification as a controlled AI chip and the report has since been corrected, and the incorrect claim has been removed. TSMC is a law-abiding company, and we are committed to complying with all applicable rules and regulations, including applicable export controls.”
Asked about TSMC’s claim that TechInsights’ classification for the Enflame chip was erroneous, a TechInsights spokesperson simply reiterated that the technical analysis was “ongoing and not complete.”
Enflame did not reply to requests for comment.
TSMC has previously been accused of violating export controls related to manufacturing a chip found in AI processors from the leading Chinese tech company Huawei, according to Reuters.
In April, Reuters reported that the Commerce Department opened an investigation into TSMC over how its chips made for a company called Sophgo wound up in Huawei’s processors, which was already prohibited by export controls from receiving TSMC-made AI chips, and said TSMC could face a penalty of $1 billion or more. At the time, a TSMC spokesperson said that the company was committed to complying with the law and that it was cooperating with the Commerce Department.
When asked about the existence and status of the Huawei investigation, Commerce Department spokesperson Lauren Weber Holley wrote in an email: “The Department of Commerce does not comment on active enforcement matters or confirm or deny the existence of any pending investigations.”
