Taiwan Semiconductor Manufacturing Co., the world’s largest contract chipmaker, said it’s ready to “take prompt action to ensure compliance” after a report claimed the U.S. is probing whether the Taiwanese chipmaker is working with Chinese tech giant Huawei in spite of Washington’s sanctions.
On Thursday, The Information reported, citing unidentified sources, that the U.S. Commerce Department recently reached out to TSMC to ask whether it was working with Huawei on smartphone and AI chips. Officials may also be probing whether TSMC conducted required due diligence on orders to prevent Huawei from getting the chips indirectly through intermediary companies.
“If we have any reason to believe there are potential issues, we will take prompt action to ensure compliance, including conducting investigations and proactively communicating with relevant parties including customers and regulatory authorities as necessary,” TSMC said in a statement Friday.
Washington blocked Huawei from getting semiconductors made using U.S. technology or software in 2020, following an earlier 2019 decision to place the company on the Entity List, a U.S. trade blacklist. TSMC, which manufactured chips for Huawei, stopped new orders for the Chinese tech company after the U.S. tightened its export controls.
The Biden administration broadened its export controls in October 2022 that blocked sales of advanced chips and chipmaking equipment to Chinese companies.
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The U.S. Commerce Department’s investigation is still in its early stages with no clear timeline for a conclusion, according to The Information.
Huawei did not immediately respond to Fortune’s request for comment.
For just over a year, Huawei has rolled out smartphones featuring advanced semiconductors that should have been blocked by U.S. rules. Analysts believe that Chinese chipmakers are using older equipment to make these relatively higher-end processors.
In recent weeks, U.S. lawmakers have urged the Biden administration to block Chinese companies allegedly linked to Huawei from accessing U.S. technology.
Huawei is enjoying a resurgence, owing in part to new products like its premium smartphones and AI chips. The company says it’s “back on track” after generating nearly $100 billion in sales last year.
On Friday, TSMC shares rose almost 5% after the world’s largest contract chipmaker earned 325.3 billion New Taiwan dollars ($10.1 billion) in net income last quarter, a 54% year-on-year jump and ahead of expectations. It projected as much as $26.9 billion in revenue for the final quarter of the year, also ahead of expectations.