TSMC Suspends Shipments to Chinese Company Due to Alleged Huawei Link: Report

In response to the suspension, Sophgo published a statement on its website on Sunday, asserting that it complies with all applicable laws and denying any business relationship with Huawei. “We submitted a detailed investigation report to TSMC to prove that we are not related to Huawei,” the company said. Sophgo is affiliated with Bitmain Technologies Ltd., a leading manufacturer of cryptocurrency mining equipment.

TSMC declined to comment on the specific suspension but stated earlier this week that it had not supplied Huawei since mid-September 2020. “We are not aware of TSMC being the subject of any investigation at this time,” the company said in a statement. He added that he is proactively communicating with the US Department of Commerce on such matters.

The U.S. Commerce Department acknowledged it was aware of reports of possible violations of export controls but declined to comment on ongoing investigations. “We take allegations of violations seriously,” a ministry spokesman said.

TechInsights Inc., a technology research firm, discovered the TSMC-manufactured chip during teardown of the multi-chip processor in Huawei’s Ascend 910B, according to a source familiar with the findings. Aware of this discovery, TSMC notified US authorities about two weeks ago and subsequently halted shipments to the customer identified as Sophgo.

The incident raises concerns that U.S. export controls designed to limit Huawei’s access to advanced semiconductors could potentially be circumvented. In 2020, the US expanded its authority to block shipments to Huawei of foreign-made items that are directly the product of US technology or software, including chips produced by TSMC.

Huawei, on the other hand, stated on Tuesday that it has not produced any chips through TSMC since the US export rules came into force in 2020. “We have strictly complied with all laws and regulations,” a Huawei spokesperson said. The company did not provide further details on how the TSMC chip was incorporated into the Ascend 910B processor, which is considered one of the most advanced AI chips from a Chinese company.

Sophgo’s alleged connection with Huawei has come under scrutiny due to their shared connections. Sophgo was founded by Micree Zhan, who is also the co-founder of Bitmain. Taiwan’s Democracy, Society and Emerging Technology Research Institute announced in August that Bitmain had acquired Nvidia Corp. and Advanced Micro Devices Inc.’s dominance in the artificial intelligence chip market.

In 2021, Taiwanese prosecutors raided Bitmain’s operations in Taiwan, charging two subsidiaries with illegally hiring semiconductor engineers and conducting unauthorized research and development activities. According to the New Taipei prosecutor’s office, the four Taiwanese defendants pleaded guilty and were fined.

Sophgo maintains that it operates independently and has research and development centers in more than 10 cities in China and other countries. “We fully comply with all legal requirements and have no direct business connection with Huawei,” the company said in its statement.

TSMC’s suspension highlights the challenges global semiconductor companies face in navigating complex international regulations and supply chain relationships. This also reflects the broader impact of US export controls on China’s tech industry, particularly on firms such as Huawei that have been targeted for national security reasons.

Industry analysts suggest that companies like Huawei may resort to indirect methods, such as using third parties or proxies to secure components, to obtain limited technology. “Huawei’s initiative to produce chips through TSMC reflects a larger strategy to continue leveraging Western-designed technologies,” said an industry expert familiar with the matter. “The company often hides its chip suppliers to avoid possible conflicts with its partners.”

The U.S. government is cautious about enforcing export controls, and any violations could have significant impacts on the companies involved. “We are committed to ensuring that sensitive U.S. technologies do not fall into the hands of organizations that pose a national security risk,” a Commerce Department spokesman said.