(Reuters) - U.S. President Donald Trump's nominee to a post overseeing export policy for China on Thursday called a report about Taiwan Semiconductor Manufacturing Co ( TSM ) producing hundreds of thousands of chips for Huawei "a huge concern."

Jeffrey Kessler, Trump's pick for Under Secretary of Commerce for Industry and Security, was asked at his nomination hearing before the Senate Banking Committee about the illegal shipments of chips.

"It's critical to ensure that we have strong enforcement," Kessler said, calling for the Bureau of Industry and Security, which he would oversee, to use "the full scope of enforcement and penalty authorities that it has."

Huawei is on a Commerce Department trade list that essentially bars it from receiving U.S. goods and technology, as well as foreign-made goods like chips from companies like TSMC made with U.S. technology.

In October, research firm TechInsights, a Canadian tech research firm, took apart Huawei's 910B AI processor and found a TSMC chip in it. Huawei's 910B is viewed as the most advanced AI accelerator mass produced by a Chinese company.

TSMC suspended shipments to Sophgo, whose chip matched the one in the Huawei 910B and, in November, as Reuters reported, the Commerce Department ordered TSMC to halt shipments of certain chips to Chinese customers.

TSMC did not immediately respond to a request for comment.