Taiwan Semiconductor Manufacturing Company Limited (TSMC) could be fined $1 billion or more in the United States probe into whether it violated Washington's sanctions on Huawei Technologies Co., Ltd. by cooperating with it on smartphones and artificial intelligence (AI)-powered chips, it was reported on Tuesday.

According to two sources that spoke to Reuters, the US Commerce Department presumed that the link goes through the China-based technology design company Sophgo, which orders chips from TSMC and reportedly sometimes collaborates with Huawei, which both Sophgo and Huawei denied. It is alleged that through Sophgo, one of TSMC's chips ended up in Huawei's Ascend 910B AI processor.

Previously, the Commerce Department started investigating TSMC's alleged partnership with Huawei. After that was reported, the chipmaker announced it will "take prompt action to ensure compliance" with Washington's sanctions. Huawei has been sanctioned in the US over its alleged links to the Chinese government.