TSMC (TSM) has halted shipments to a customer after discovering that one of its chips ended up in a Huawei product, according to an exclusive Reuters report citing a Taiwanese official. The report stated that the chipmaker had stopped shipments to the client.
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TSMC Has Initiated an Investigation into the Incident
Additionally, about two weeks ago, TSMC began a detailed investigation and notified U.S. and Taiwanese authorities, considering it an “important warning event.” This issue arose after tech research firm TechInsights found one of TSMC’s chips in a Huawei device. Both the company and the official have declined to name the client.
Why Is This Incident a Concern for TSMC?
This incident is concerning for TSMC as it could potentially violate U.S. export restrictions. About two years ago, the U.S. imposed restrictions on the export of advanced AI chips to China to prevent Chinese companies, especially Huawei, from obtaining or manufacturing advanced semiconductors due to national security concerns.
However, Chinese firms have attempted to bypass restrictions by using cloud services from companies like Amazon (AMZN) to access advanced U.S. chips and AI capabilities.
Is TSM a Buy, Sell, or Hold?
Analysts remain bullish about TSM stock, with a Strong Buy consensus rating based on a unanimous five Buys. Over the past year, TSM has surged by more than 100%, and the average TSM price target of $205 implies an upside potential of 3.1% from current levels.
