TSMC's solid results bode well for one of its largest customers, which currently dominates the market for AI chips.

Nvidia CEO Jensen Huang admitted Wednesday that Nvidia was 100% at fault for a design flaw in the company's new Blackwell AI chips. The flaw has been fixed and the chips are now in production.

Taiwan Semiconductor Manufacturing Company (TSMC) said on Tuesday it has informed the United States of a potential attempt by Huawei to circumvent U.S. export controls prohibiting the chipmaker from producing AI chips for the Chinese company.

TSMC and other chipmakers are barred from doing business with Huawei without exemptions from the US government.

The demand for AI "is real," said CC Wei, TSMC's chairman and CEO.

TSMC, the world's largest contract chipmaker, bet on sustaining its strong growth, after reporting on Thursday a forecast-beating 54% jump in quarterly profit driven by soaring demand for chips used in artificial intelligence (AI).

Chinese foundry Semiconductor Manufacturing International (SMIC) has found itself in a precarious position following a recent TechInsights teardown report concerning a TSMC-manufactured 7nm chip in a Huawei AI accelerator.

TSMC's blockbuster results should be a welcome surprise to investors after ASML's earnings sent semiconductor stocks tumbling earlier this week.

According to a Reuters report, TSMC only notified the U.S. government over potential circumvention of U.S. export controls only after the publication by TechInsights.

Taiwan Semiconductor Manufacturing Company has reportedly informed the U.S. government about a potential attempt by Huawei to have it make artificial intelligence chips for the sanctioned Chinese tech giant.

TSMC’s discovery raises questions about how Huawei, considered China’s best hope of ascending the semiconductor industry, acquired advanced chips.