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Warner criticizes Biden for lax monitoring of TSMC's

compliance

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Commerce Department defends its tough stance on China

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Bipartisan concern over U.S. export control policy

effectiveness

By Alexandra Alper

WASHINGTON, Oct 31 (Reuters) - Democratic Senator Mark

Warner criticized the Biden administration for "apparent lax

monitoring" of TSMC following revelations a chip

produced by the Taiwanese chipmaker ended up in a product made

by China's heavily sanctioned Huawei.

In a letter reviewed by Reuters, the influential lawmaker also

took the government to task for "repeated leadership failures"

in enforcement of U.S. export rules after TSMC informed the U.S.

that one of its chips had been found in a Huawei AI processor, a

possible violation of U.S. restrictions on the Chinese

telecommunications equipment maker.

"TSMC's production of chips for Huawei has serious

implications for U.S. national security," Warner, who chairs the

powerful Senate Intelligence Committee, said in the letter to

President Joe Biden dated Oct. 30.

"I urge you to swiftly take immediate steps to assess and

strengthen the efficacy of existing controls," he added.

The White House, Huawei and the Chinese Embassy in

Washington did not immediately respond to requests for comment.

TSMC declined to comment.

The Commerce Department, which oversees export policy, said in a

statement that "No Commerce Department in history has been

tougher on China." It touted its moves to add over 400 Chinese

companies to a trade restriction list, "extensive" new controls

and a record number of convictions last year. "We will continue

to use all of our tools - administrative, criminal, and

regulatory - to safeguard U.S. national security," the statement

added.

But the letter, coming from a fellow Democrat, illustrates

the growing, bipartisan concern among lawmakers that Washington

is not taking sufficiently aggressive action to halt the

technological advance of Beijing. The U.S. fears China could use

the technology to bolster its military capabilities.

Republican congressman John Moolenaar, who chairs the House

of Representatives Select Committee on China,

said last week

the TSMC chip represents "a catastrophic failure" of U.S.

export control policy, and asked for "immediate answers" from

Commerce and TSMC about the scope of the "disaster."

Huawei was added to a trade restriction list in 2019 amid

fears its telecoms equipment could be used to spy on users,

which Huawei denies. The restriction means U.S. and foreign

suppliers have to obtain a special difficult-to-obtain license

before shipping to Huawei.

But Huawei unveiled a new phone last year powered by a

sophisticated chip, seen as a symbol of the China's

technological resurgence despite Washington's best efforts to

cripple its capacity to produce advanced semiconductors.

The U.S. has also imposed a raft of measures aimed at

restricting the shipment of advanced GPU chips - which enable

artificial intelligence (AI) - to China to hobble its AI

capabilities, which Washington fears could be used to develop

bioweapons and launch large-scale cyber attacks.

The TSMC chip ended up in Huawei's Ascend 910B, the company's

own GPU product, Reuters reported, apparently fueling Huawei's

efforts to develop a competing ecosystem for AI, Warner wrote.

"This recent incident - and (the Commerce Department's)

apparent lax monitoring of TSMC's compliance - raise questions"

about whether TSMC is observing the Commerce Department's limits

on the computing power of AI chips that can be shipped to China,

Warner added.