The company in question, Sophgo, gained attention when a chip found in Huawei’s Ascend 910B multi-chip system was identified as one it had ordered from Taiwan Semiconductor Manufacturing Company. Sophgo is the most recent Chinese entity to face repercussions from the US for its association with Huawei. Earlier this month, the Commerce Department added several other firms linked to Huawei’s covert operations to its restricted trade list.
According to the source, Sophgo, which is affiliated with bitcoin mining equipment provider Bitmain, is in the process of being added to the Entity List.
Entities are placed on this list due to actions that threaten US national security and foreign policy interests. Consequently, exporters are prohibited from sending goods and technology to these companies without a license, which is typically not granted.
Huawei, a major telecommunications equipment manufacturer and technology conglomerate, was added to the list in 2019. Since 2020, it has been illegal to ship even foreign-manufactured chips to Huawei without a license. A spokesperson for the US Commerce Department declined to provide any comments on the matter.
Sophgo has not yet responded to inquiries for comment. In a statement released in October, the company asserted that it “has never been engaged in any direct or indirect business relationship with Huawei.”
According to tenders reviewed by Reuters, Sophgo supplies local governments and state-owned enterprises, including China Telecom. Over the past two years, Sophgo and Bitmain AI chips have been procured by Chinese state-run universities developing AI technologies and police stations seeking to enhance their surveillance systems, as indicated by the tender review.
Tech research firm TechInsights disassembled the Huawei 910B and identified a TSMC chip, subsequently notifying the chip manufacturer, which in turn informed the US Commerce Department, as reported by Reuters in October. Upon confirming that the chip corresponded with Sophgo’s design, TSMC reportedly halted shipments to the company.
As the largest contract chipmaker globally, TSMC stated in October that it has not supplied Huawei since 2020.
A Taiwanese official mentioned that TSMC had notified both Taiwanese and US authorities and initiated a thorough investigation that same month.
On Friday, a TSMC spokesperson refrained from commenting on the findings of the investigation. Beginning November 11, the US mandated TSMC to cease shipments of seven-nanometer or more advanced chips to China, which could potentially be utilized in AI applications, as exclusively reported by Reuters.
Huawei asserted in October that it has not manufactured any chips through TSMC since the US implemented new export regulations on the company in 2020. The company did not provide an immediate response to a request for comment on Friday. Once significantly impacted by US restrictions, Huawei has since diversified its operations and re-established itself as a key player in China’s AI-chip sector.
The Ascend 910B, launched in 2022, is regarded as the most sophisticated AI chip produced by a Chinese firm. Huawei intends to commence mass production of its latest chip, the Ascend 910C, designed to compete with US AI chipmaker Nvidia, in early 2025, as reported by Reuters last month.
Sophgo was co-founded by Micree Zhan, who also co-founded Bitmain, according to corporate registration records.
Zhan continues to hold an indirect 23 percent stake in Xiamen Sophgo Technologies and five of its subsidiaries through an investment vehicle, Beihaishan Beside Investment Partnership, which he fully owns, as per Wirescreen, a business intelligence platform, and corporate documents reviewed by Reuters. In 2023, Sophgo communicated with the US Federal Communications Commission using a Bitmain email address.
On October 28, Bitmain stated on social media that it “is not involved in or otherwise related to the supply chain investigation.”
Bitmain's website claims to be the premier manufacturer of digital currency mining servers under its Antminer brand, serving clients in more than 100 countries worldwide.