TSMC Suspends Shipments to Chinese Firm After Chip Found in Huawei AI Processor

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On Sun, 27 Oct, 12:01 AM UTC

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Taiwan Semiconductor Manufacturing Company (TSMC) halted shipments to China-based chip designer Sophgo after discovering its chip in a Huawei AI processor, raising concerns about U.S. export control violations and the effectiveness of sanctions on China's semiconductor industry.

TSMC Halts Shipments to Chinese Firm Amid Huawei Chip Controversy

Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest contract chipmaker, has suspended shipments to China-based chip designer Sophgo following the discovery of a TSMC-made chip in Huawei's Ascend 910B AI processor 12. This development has raised questions about potential violations of U.S. export controls and the effectiveness of sanctions targeting China's semiconductor industry.

Discovery and Immediate Actions

Tech research firm TechInsights uncovered the presence of a TSMC chip in Huawei's Ascend 910B multi-chip processor during a teardown analysis 1. Upon learning of this finding, TSMC promptly notified U.S. authorities about two weeks ago 1. The company also alerted Taiwanese officials and initiated a detailed investigation into the matter 2.

Implications for U.S. Sanctions

The discovery has significant implications for U.S. sanctions on China's tech sector. Arisa Liu, a research fellow at the Taiwan Institute of Economic Research, stated that "U.S. long-arm sanctions on China's semiconductor sector have proven to be porous" 3. This incident highlights potential loopholes in the existing export control measures and underscores China's persistent efforts to access advanced foundry technologies.

Huawei and TSMC's Statements

Both Huawei and TSMC have issued statements regarding the situation:

  1. TSMC claims it has not supplied Huawei since mid-September 2020 and has "proactively communicated" with the U.S. Commerce Department about the matter 1.
  2. Huawei asserts that it has not produced any chips via TSMC since the implementation of new U.S. export rules in 2020 3.

Sophgo's Connection

Sophgo, the company to which TSMC suspended shipments, is affiliated with cryptocurrency mining equipment company Bitmain 1. Sophgo was co-founded by Micree Zhan, who also co-founded Bitmain 5. The company has been identified as aiming to challenge the AI chip market dominance of Nvidia and AMD 5.

Huawei's Ascend Chip Series

Huawei's Ascend chip series has become central to China's semiconductor self-sufficiency efforts. The Ascend 910B, in particular, is considered the most advanced AI chip available from a Chinese company 3. A Huawei executive claimed that the 910B chip is comparable to Nvidia's A100 in terms of computing power for training large AI models 4.

Ongoing Investigations and Uncertainties

The U.S. Department of Commerce acknowledged awareness of potential export control violations but did not confirm any ongoing investigations 1. Many questions remain unanswered, including the duration and scope of the suspected customer's cooperation with TSMC and the exact path through which the TSMC chips ended up in Huawei's hardware 3.

This incident underscores the complexities of enforcing semiconductor export controls and highlights the ongoing challenges in regulating the global chip supply chain, particularly in relation to China's tech ambitions.

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