TSMC Suspends Shipments to Sophgo

By Karen Freifeld and Fanny Potkin
(Reuters) – Taiwan Semiconductor Manufacturing Company (TSMC) has suspended shipments to China-based chip designer Sophgo after one of its chips was found in a Huawei AI processor.

Sources indicate that Sophgo had previously ordered chips from TSMC that matched the components found on Huawei's Ascend 910B processor. Given Huawei's restrictions on purchasing technology to protect U.S. national security, details of how the chip made its way to Huawei remain unclear.

Sophgo is affiliated with Bitmain, a cryptocurrency mining equipment company, but did not respond to requests for comment. TSMC and Huawei also declined to comment, while the U.S. Department of Commerce acknowledged awareness of potential violations of export controls without confirming whether an investigation is ongoing.

TechInsights discovered the TSMC chip while analyzing Huawei's Ascend 910B and informed TSMC, which subsequently notified U.S. authorities and began an investigation. It remains unclear which specific client prompted the halting of shipments, though reports have identified Sophgo as that client.

In a statement earlier this week, TSMC clarified that it has not supplied Huawei since mid-September 2020 and emphasized its proactive communication with the Commerce Department regarding this issue.

Huawei confirmed it has not produced any chips through TSMC since the U.S. imposed new export rules in 2020. The U.S. expanded its authority during that year to prevent foreign-produced items using U.S. technology from reaching Huawei.

Prior to the sanctions, TSMC had supplied chips for Huawei’s Ascend series, including the Ascend 910B, which is regarded as a leading AI chip from a Chinese firm.

A report from Taiwan's Research Institute for Democracy, Society and Emergency Technology (DSET) mentioned Bitmain's ambition to compete against Nvidia and AMD in the AI chip market and identified Sophgo as a Bitmain affiliate.

Sophgo was co-founded by Micree Zhan, also a co-founder of Bitmain, according to corporate registration records. The company engaged with the Federal Communications Commission in 2023, utilizing a Bitmain email address listed under Xiamen Sophgo Technologies Ltd.

In 2021, authorities raided Bitmain's operations in Taiwan, charging several affiliates with illegal activities related to semiconductor recruitment and R&D. Four Taiwanese defendants pleaded guilty, resulting in fines.

Sophgo claims to have research and development centers across more than ten cities in China and other countries.