TSMC Suspends Shipments to China-Based Sophgo Amid U.S. Export Violation Concerns

Taiwan Semiconductor Manufacturing Company (TSMC) has halted shipments to China-based chip designer Sophgo after discovering that a TSMC-manufactured chip ended up in Huawei’s Ascend 910B AI processor. The incident, amidst stringent U.S. export controls, underscores the growing complexity of international semiconductor supply chains and the geopolitical pressures faced by the industry.

TSMC’s suspension of shipments to Sophgo illustrates the complexities of navigating export regulations amid geopolitical pressures. This situation has intensified scrutiny of China’s semiconductor supply chain, highlighting the challenges faced by companies caught between international trade compliance and technological advancement.

TSMC Halts Shipments: Taiwan Semiconductor Manufacturing Company (TSMC) has suspended shipments to China-based chip designer Sophgo after discovering a TSMC-manufactured chip in Huawei’s Ascend 910B AI processor. This action was taken in compliance with U.S. export restrictions.
Discovery and Notification: TechInsights, a technology research firm, found the TSMC component in Huawei’s AI chip, leading TSMC to notify both Taiwan and U.S. authorities. TSMC proactively communicated with the U.S. Department of Commerce, stating there was no active investigation against it at the moment.
Sophgo’s Response: Sophgo denied any relationship with Huawei and insisted on full compliance with international trade laws. The company provided an investigation report to TSMC to support its claims.
Huawei’s Position: Huawei denied sourcing any chips from TSMC after the 2020 U.S. export restrictions. It stated that no TSMC-produced chips were used following the tightening of these rules.
Background on Bitmain and Sophgo: Sophgo, established by Micree Zhan, co-founder of Bitmain, has close ties to Bitmain. Bitmain has faced scrutiny in Taiwan for allegedly recruiting semiconductor engineers illegally. Bitmain and Sophgo’s association highlights potential compliance challenges.
Industry and Regulatory Concerns: The incident has raised concerns about supply chain security and has put a spotlight on China’s semiconductor ambitions. The U.S. Department of Commerce’s involvement highlights the geopolitical tensions and security implications of semiconductor supply chains.
Impact on China’s Semiconductor Strategy: Huawei’s AI chip, Ascend 910B, represents China’s progress in AI chips, but such incidents could lead to stricter controls and increased scrutiny. Bitmain’s attempt to diversify into AI chip production reflects China’s goal to reduce reliance on Western technology.