By Alexandra Alper and Karen Freifeld
(Reuters) – The Biden administration plans to blacklist the Chinese chip maker TSMC that illegally manufactured Huawei's spy processor, according to a person familiar with the matter.
A Chinese company, Sophgo, drew attention after a chip found in Huawei's Ascend 910B multi-chip system matched one ordered by Taiwan Semiconductor Manufacturing Company.
Sophgo is the latest Chinese company to be targeted by the US for helping Huawei. This month, the Commerce Department added other companies considered part of Huawei's shadow network to the US Commerce Department's restricted trade list.
Sophgo, a subsidiary of bitcoin mining equipment vendor Bitmain, is in the process of being listed, known as the Institutional List, the source said.
The companies are being added to the list of activities that are against US national security and foreign policy interests. Exporters have been barred from exporting goods and technology to them without a license, which may be refused.
China's Huawei, a telecommunications equipment manufacturer and technology conglomerate, is listed in 2019. As of 2020, it has become a crime to ship chips made in other countries to a company without a license.
A spokesman for the US Commerce Department declined to comment.
Sophgo did not immediately respond to requests for comment. In an October statement, the company said it was “not involved in any direct or indirect relationship with Huawei.”
Sophgo is a supplier to local governments and state-owned firms such as China Telecom (NYSE:), according to tenders reviewed by Reuters.
Over the past two years, Sophgo and Bitmain AI chips have been purchased by Chinese universities that build AI tools and by police stations looking to improve their surveillance capabilities, according to a tender review.
RESEARCH CONFIRMATION FOUND CHIP
Research firm TechInsights picked up the Huawei 910B, discovered the TSMC chip and notified the chip maker, which notified the US Department of Commerce, as Reuters reported in October. After setting up a chip compatible with Sophgo's design, TSMC suspended shipments to the company, the sources said.
TSMC, the world's largest contract chipmaker, said in October that it would not supply Huawei from 2020.
A Taiwanese official said that month that TSMC notified Taiwan and US authorities and began a thorough investigation.
A TSMC spokesman declined to comment Friday on the investigation.
Starting November 11, the US ordered TSMC to stop shipments to China of seven nanometer or advanced chips that can be used in AI applications, as Reuters reported exclusively.
Huawei said in October that it has not produced chips with TSMC since the US imposed new export rules on the company in 2020. It did not immediately respond to a request for comment Friday.
Once ousted by US sanctions, Huawei has since changed and re-emerged at the center of China's AI-chip ambitions.
The company's Ascend 910B, released in 2022, is considered the most advanced AI chip available from the Chinese company. Huawei plans to begin production of its new chip, the Ascend 910C, to compete with US AI chipmaker Nvidia (NASDAQ: ) in early 2025, as Reuters reported last month.
Sophgo was founded by Micree Zhan, who also founded Bitmain, according to the company's registration details.
Zhan still indirectly owns 23% of Xiamen Sophgo Technologies Ltd, and five of its subsidiaries through an investment vehicle, Beihaishan Foreign Investment Partnership, which is wholly owned, according to Wirescreen, a business intelligence and records platform of the company reviewed by Reuters.
Sophgo contacted the US Communications Commission in 2023 using a Bitmain email address.
Bitmain said on social media on October 28 that it is “not involved or otherwise related to the supply chain investigation.”
Bitmain's website says it is the world's leading manufacturer of digital mining servers under its Antminer brand, and has customers in more than 100 countries.