TSMC halts AI chip supply to Bitmain-linked firm amid U.S. investigation

TSMC has cut off chip supplies to Xiamen Sophgo, a Chinese company tied to Bitmain’s co-founder Micree Zhan. The world’s largest chipmaker made this move while facing scrutiny from the U.S. Commerce Department, which is investigating possible violations of sanctions imposed on Huawei.

Sophgo had been sourcing chips from TSMC that closely resemble ones in Huawei’s Ascend 910B processor, sparking questions about how TSMC’s technology could have ended up in Huawei’s restricted products.

Huawei has been under U.S. sanctions since 2020, banning it from accessing advanced technologies due to national security concerns.

On Saturday, The Information reported that TSMC stopped shipments to Sophgo earlier this month. The U.S. Commerce Department launched an investigation into whether TSMC knowingly or unknowingly supplied chips to Huawei through intermediaries.

Sophgo and Bitmain have remained silent on the matter. TSMC and Huawei have also declined to comment, while the Commerce Department acknowledged awareness of the situation but didn’t confirm if an investigation was underway.

Sophgo’s links to Huawei’s ascend 910B AI processor

TechInsights, a research firm, discovered TSMC’s chip within Huawei’s Ascend 910B during a teardown of the device. TSMC notified U.S. authorities two weeks ago upon learning that one of its chips had found its way into a Huawei product.

Soon after, TSMC ceased further shipments to Sophgo. An anonymous Taiwanese official said that TSMC discovered the chip issue, prompting it to halt supply. The official didn’t initially reveal Sophgo as the client, but other sources later confirmed the connection.

TSMC stated earlier this week that it has not supplied Huawei directly since mid-September 2020 and that it had proactively informed the Commerce Department about the situation.

“We are not aware of TSMC being the subject of any investigation at this time,” TSMC said. Meanwhile, Huawei claims it has not produced any chips with TSMC since the U.S. imposed stricter export controls in 2020.

The U.S. has extended its reach since 2020 to halt shipments of foreign-made items with U.S. technology to Huawei, including TSMC’s chips. Before these restrictions, TSMC provided chips for Huawei’s Ascend lineup. The Ascend 910B, launched in 2022, is considered one of the most advanced AI chips in the Chinese tech industry.

U.S. raises concerns over AI

The U.S. government has expressed concern over China’s use of artificial intelligence to monitor its citizens, spread misinformation, and potentially undermine security. On October 24, White House National Security Advisor Jake Sullivan spoke about these issues at the National Defense University.

Sullivan emphasized the risks associated with China’s technological ecosystem, mentioning it doesn’t adequately protect data, supports mass surveillance, and can even coerce countries.

In August, Taiwan’s Research Institute for Democracy, Society, and Emergency Technology (DSET) issued a report identifying Bitmain, the parent company behind Sophgo, as a prominent Chinese IC designer and supplier of crypto mining machinery.

DSET highlighted Bitmain’s ambitions to challenge Nvidia and AMD’s dominance in the AI chip sector. Sophgo’s corporate filings confirm that Micree Zhan, Bitmain’s co-founder, also co-founded Sophgo.

The company reportedly used Bitmain’s email address for communication with the U.S. Federal Communications Commission in 2023, under the name Xiamen Sophgo Technologies Ltd. Sophgo operates R&D centers in over ten cities in China and other locations, as per its website.

Bitmain itself has had its share of legal issues. In 2021, Taiwanese prosecutors accused two Bitmain affiliates of illegally recruiting Taiwanese engineers and conducting unauthorized R&D activities. Four defendants from Taiwan pleaded guilty and were fined, according to the New Taipei prosecutors’ office.

This supply freeze by TSMC puts further pressure on Chinese companies to develop homegrown solutions, especially in advanced semiconductor technology.