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 chipmaker's technology was found in Chinese company Huawei's AI processors, which would violate US export control sanctions.

Taiwan Semiconductor Manufacturing Co (TSMC) may face a penalty exceeding $1bn to settle a US export control investigation, Reuters reported citing sources familiar with the matter. The probe concerns a chip TSMC manufactured that ended up in a Huawei AI processor.