SINGAPORE: Taiwan Semiconductor Manufacturing Company (TSMC), the world’s leading contract chipmaker, has reportedly ended its partnership with PowerAIR, a Singapore-based firm, after identifying a potential breach of United States export controls.
According to a report by the South China Morning Post (SCMP), citing unnamed sources, the decision was prompted by the discovery of a TSMC chip embedded within an artificial intelligence (AI) processor developed by Huawei Technologies, a Chinese tech giant subject to stringent US sanctions.
This revelation marks PowerAIR as the second company implicated in Huawei’s supply chain in recent months.
Earlier in 2024, TSMC suspended shipments to Chinese chip designer Sophgo after evidence suggested its chips were part of Huawei’s Ascend 910B multi-chip system, despite TSMC’s strict adherence to US sanctions since 2020.
The Shadowy S$1 Firm
PowerAIR PTE. LTD., a low-profile company incorporated in Singapore on 7 September 2023, has raised eyebrows with its lack of public presence and minimal capital.
According to a document obtained by The Online Citizen (TOC) from the Accounting and Corporate Regulatory Authority (ACRA), PowerAIR operates out of One Raffles Place, a prestigious location in the heart of Singapore’s Central Business District.
The company’s declared activities include engineering design and consultancy, with a secondary focus on semiconductor assembly and testing.
However, its paid-up capital stands at a mere S$1.
Additionally, its shareholders include Powerair (BVI) Limited, a British Virgin Islands-registered entity holding a solitary S$1 share.
PowerAIR’s directors include a Malaysian based in Alor Setar, Kedah, and a Singaporean, alongside a Singaporean company secretary.
The firm’s complete lack of a public website or contact information prevented TOC from obtaining further clarification regarding its alleged links to TSMC and Huawei.
Huawei and US Export Controls
Huawei Technologies has been subject to a US-imposed blanket ban since 2020, restricting its access to cutting-edge semiconductor technology worldwide.
TSMC, a critical player in the global semiconductor industry, previously announced it had ceased supplying Huawei following the sanctions’ implementation.
Despite these restrictions, Huawei has faced allegations of circumventing the sanctions through intermediaries and proxy companies, intensifying US scrutiny of chipmakers like TSMC.
Sophgo, a Chinese AI chip designer previously implicated in supplying Huawei, denied any formal business relationship with the company, as did its affiliate, Bitmain, a bitcoin mining equipment manufacturer.
TSMC has been under growing pressure from the US to scrutinise its mainland Chinese clients.
Reports indicate the company has already limited shipments to AI chip start-ups such as Enflame, MetaX, and Iluvatar Corex.
Additionally, the US Commerce Department recently ordered TSMC to halt shipments of advanced chips requiring 7-nanometre or finer processes to certain Chinese customers.
The Biden administration has proposed new measures to restrict China’s access to advanced AI chips, limiting exports to 120 countries while exempting close allies like Australia, the UK, and Japan.
Despite strained US-China relations, TSMC continues to rely heavily on mainland China for revenue.
In 2024, sales to Chinese clients were projected to grow by 26 per cent, reaching US$10.4 billion, or 12 per cent of the company’s total revenue of US$88.3 billion.
