Biden Administration Targets Chinese Firm Over Taiwan Semiconductor Chip Found in Huawei Tech

Chinese company Sophgo whose Taiwan Semiconductor Manufacturing Co TSM-made chip was allegedly found in a Huawei Technologies Co artificial-intelligence processor, faces potential blacklisting from the U.S.

Bitcoin mining equipment supplier Bitmain affiliate Sophgo is the latest Chinese company potentially on the U.S. semiconductor embargo list, citing national security threats, Reuters reports.

In October, tech research firm TechInsights reportedly discovered the Taiwan Semiconductor chip in the Huawei 910B and told the chipmaker, which notified the U.S. Commerce Department.

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After determining the chip matched Sophgo’s design, Taiwan Semiconductor suspended shipments to the company.

Sophgo, a supplier to local governments and state-owned firms like China Telecom, denied the charges in October. Huawei also denied the allegations, Reuters report said.

On November 11, the U.S. urged Taiwan Semiconductor to suspend shipments of seven-nanometer or more advanced chips to China. The U.S. sanctions forbid exporters from shipping goods and technology without a license, which will likely be denied.

In December, the U.S. government sanctioned 140 Chinese semiconductor firms, including chip equipment manufacturers such as Naura Technology Group and others, targeting advanced memory chips and chipmaking tools.

The U.S. added telecom equipment maker Huawei to its Entity List in 2019, restricting its access to foreign-made chips since 2020. However, over the past two years, Chinese state-run universities building AI tools and police stations splurged on Sophgo and Bitmain AI chips to upgrade their capabilities.

The U.S. sanctions prompted Huawei to diversify into an AI chip powerhouse. China considers Huawei’s Ascend 910B the most advanced AI chip in the country. Huawei plans to commercialize its Ascend 910C in early 2025 to rival Nvidia Corp NVDA.

Taiwan Semiconductor stock is trading upwards on Monday. At the end of last week, the Taiwanese contract chipmaker’s stocks were trading at ~ a 25% premium to those in its domestic market, Bloomberg reports, signaling investors’ conviction in the AI frenzy.

This marks a record premium since October 17, beating the quarter’s daily average of 19%.

Price Action: TSM stock is up 1.75% at $200.67 premarket at last check Monday.

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