The US government is preparing to blacklist a Chinese company involved in a controversial transaction with Huawei, according to an inside source. Sophgo allegedly incorporated a chip manufactured by Taiwan Semiconductor Manufacturing Company (TSMC) into a Huawei artificial intelligence processor, violating US trade regulations.
Huaweiโs shadow network under scrutiny
Sophgoโs role in supplying a TSMC-designed chip to Huaweiโs Ascend 910B multi-chip system has sparked concerns. The Biden administration has been actively targeting firms connected to Huawei, which has been under US trade restrictions since 2019. Earlier this month, the US Commerce Department added several entities linked to Huawei to its restricted trade list.
The inclusion of Sophgo on the Entity List, which restricts exports to companies that pose a risk to national security or foreign policy interests, is currently underway. If added, Sophgo will require a license to receive goods or technology from US exporters, a request that is likely to be denied.
Sophgo, a Bitcoin mining equipment manufacturer and Bitmain subsidiary has denied direct or indirect business ties with Huawei. However, Reuters reviewed tenders that suggest Sophgo has supplied chips to Chinese state-run universities and agencies, including police stations upgrading surveillance tools.
TSMC halts shipments amid investigation
The issue came to light when tech research firm TechInsights dismantled the Huawei Ascend 910B processor and identified a TSMC-made chip that matched Sophgoโs design. TSMC promptly notified US authorities and suspended shipments to Sophgo. The company clarified that it had not supplied Huawei since 2020, when stricter export controls were enacted.
A spokesperson from TSMC declined to comment on the ongoing investigation but confirmed earlier in October that the company had stopped shipping advanced chips to China following a US order. Taiwan officials have also been actively involved in reviewing the case.
Huaweiโs ambitious AI plans
Despite US restrictions, Huawei has re-emerged as a leader in Chinaโs AI chip development. The Ascend 910B, released in 2022, is Chinaโs most advanced AI chip. Huawei plans to mass-produce its next-generation AI chip, the Ascend 910C, in early 2025. The new chip is expected to challenge US competitors, such as Nvidia.
Sophgo was co-founded by Micree Zhan, who also co-founded Bitmain. Corporate records reveal that Zhan indirectly owns 23% of Sophgo and its subsidiaries through an investment vehicle. Sophgoโs communication with US authorities in 2023 reportedly used a Bitmain email address, further linking the two firms.
Bitmain, however, distanced itself from the controversy, stating on social media that it is not involved in the supply chain investigation. The company, known for its Antminer brand, is a leading manufacturer of cryptocurrency mining servers with customers in over 100 countries.
The US Commerce Department and Huawei have declined to comment on the latest developments, leaving questions about the extent of Sophgoโs role in Huaweiโs AI chip strategy unanswered.
