By Karen Freifeld and Fanny Potkin
(Reuters) – Taiwan Semiconductor Manufacturing Company has suspended shipments to China-based chip designer Sophgo after a chip it made was found in a Huawei artificial intelligence processor, according to two people familiar with the matter.
Sophgo had ordered chips from TSMC that matched the one found in Huawei's Ascend 910B, the people said. Huawei is prohibited from purchasing technology to protect US national security. Reuters could not determine how the chip ended up in the Huawei product.
Sophgo, which is affiliated with cryptocurrency mining equipment company Bitmain, did not respond to requests for comment. TSMC declined to comment. Huawei did not immediately respond to a request for comment. The U.S. Commerce Department said it was aware of reports of possible violations of U.S. export controls but could not comment on whether any investigations are ongoing.
technology research firm TechInsights discovered the TSMC chip in Huawei's Ascend 910B when it disassembled the multi-chip processor, a different source told Reuters on Tuesday. Alerted to the discovery, TSMC notified the US about two weeks ago, the source said.
Around the same time, TSMC also stopped shipments to a customer, Reuters reported on Wednesday, citing a Taiwan official who said the suspension came after the company discovered that a chip it supplied to the customer ended up in a product. Huawei.
TSMC alerted authorities in Taiwan and the United States and began a detailed investigation, the official said. But the official did not name the client, who the latest sources identified as Sophgo. The information technology news outlet also reported the name on Saturday.
TSMC, the world's largest contract chipmaker, said earlier this week that it had not supplied Huawei since mid-September 2020 and was “proactively communicating” with the Commerce Department on the matter.
“We are not aware of TSMC being the subject of any investigation at this time,” the company statement said.
Shenzhen-based Huawei said in a statement on Tuesday that it has not produced any chips through TSMC after the United States imposed new export rules on the company in 2020.
In 2020, the United States expanded its authority to stop shipments to Huawei of foreign-produced items that are a direct product of American technology or software, including TSMC chips.
Before that, TSMC supplied chips for Huawei's Ascend series, sources told Reuters earlier this year. Its Ascend 910B, launched in 2022, is considered the most advanced ai chip available from a Chinese company.
In August, Taiwan's Research Institute for Democracy, Society and Emergency technology (DSET) reported that Bitmain, which it described as a leading Chinese company in integrated circuit (IC) design and cryptocurrency mining machine supplier , aimed to “challenge ai.” Nvidia (NASDAQ 🙂 and AMD (NASDAQ 🙂 chip market dominance.”
The DSET report described Sophgo as a subsidiary of Bitmain.
Sophgo was co-founded by Micree Zhan, who also co-founded Bitmain, according to a corporate registration database.
The company also contacted the Federal Communications Commission in 2023 using a Bitmain email address and the name Xiamen Sophgo Technologies Ltd.
In 2021, prosecutors raided Bitmain's operations in Taiwan and charged two Bitmain affiliates with illegally recruiting Taiwanese semiconductor engineers and illegally conducting R&D, according to a statement from the New Taipei prosecutor's office.
Four Taiwanese defendants pleaded guilty and received fines, according to the statement.
Sophgo's website says it has R&D centers in more than 10 cities in China and other countries.
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