Taiwan Semiconductor Manufacturing could face a penalty of $1 billion or more to settle a U.S. export control investigation over a chip it made that ended up inside a Huawei AI processor, according to two people familiar with the matter.

The Commerce Department has been investigating TSMC over its work for Chinese chip designer Sophgo, which was cut off from TSMC last year following allegations it

TSMC could be hit with a 1 billion dollar fine for indirectly supplying Huawei with AI chips that later made their way into a chipset.