TSMC Halts Shipments to Sophgo Due to Huawei Chip Issue

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TSMC Halts Shipments to Sophgo Due to Huawei Chip Issue

Taiwan Semiconductor Manufacturing Company (TSMC) has suspended shipments to the China-based chip designer Sophgo. This action follows the discovery of a TSMC-manufactured chip in an artificial intelligence processor by Huawei, despite U.S. restrictions aimed at protecting national security. The chip in question was identified in Huawei’s Ascend 910B AI processor, recognized as the most advanced AI chip emerging from a Chinese company, which was launched in 2022.

Sophgo, which is associated with the cryptocurrency mining equipment company Bitmain, stated on its website on Sunday that it complies with all laws and regulations and has never had a business relationship with Huawei. The company also reported that it provided TSMC with a detailed report to demonstrate its lack of connection with Huawei.

The U.S. Department of Commerce acknowledged being aware of the potential export control violations but did not confirm whether an investigation is ongoing. Technology research firm TechInsights was the first to detect the TSMC chip in Huawei's processor. TSMC, which halted supplies to Huawei since mid-September 2020 following U.S. export restrictions, is reported to have informed U.S. officials about the incident and is conducting a comprehensive investigation.

As the world’s largest contract chip manufacturer, TSMC stated that it has communicated with the U.S. Department of Commerce regarding the matter and is currently not subject to any investigation. Furthermore, Huawei claimed on Tuesday that it has not produced any chips through TSMC since the U.S. imposed new export rules on the company in 2020.

Sophgo, linked to Bitmain, is viewed as a potential competitor in the AI chip market against industry leaders like Nvidia and AMD. The company was founded by Micree Zhan, who is also a co-founder of Bitmain, and it communicated using a Bitmain email address on behalf of Xiamen Sophgo Technologies Ltd. with the U.S. Federal Communications Commission.

In 2021, Bitmain's operations in Taiwan faced legal challenges when New Taipei prosecutors accused two Bitmain affiliates of illegal activities, including hiring Taiwanese semiconductor engineers without proper permits. Four Taiwanese defendants involved in the case admitted their guilt and were fined.

Sophgo has research and development centers in over ten cities across China and other countries.