u.s. blacklists chinese firm over tsmc chip in huawei processor
United States, Friday, 20 December 2024.
The Biden administration is moving to blacklist Sophgo, a Chinese company, for its alleged use of TSMC-made chips in Huawei’s artificial intelligence processors. This decision comes after a TSMC chip was discovered in Huawei’s Ascend 910B processor, leading to a suspension of shipments to Sophgo. The move could escalate geopolitical tensions and potentially affect the market reach of Taiwan Semiconductor Manufacturing Co. Sophgo, an affiliate of Bitmain, has supplied state-owned firms like China Telecom but denies any business relationship with Huawei. The blacklisting aligns with U.S. efforts to tighten restrictions on Chinese tech companies, particularly those linked to Huawei, which has faced U.S. sanctions since 2019. This development is part of broader trade tensions between the U.S. and China, impacting global semiconductor supply chains and highlighting the complexities of international tech trade.
Market impact and stock performance
The blacklisting decision has significant implications for TSMC’s market position. TSMC, as a leading semiconductor manufacturer [5], faces potential disruption to its business operations amid escalating U.S.-China tensions. The company has already suspended shipments to Sophgo after the chip discovery in Huawei’s Ascend 910B [1]. These developments occur against a backdrop of broader U.S. restrictions, including a November 2024 order halting TSMC’s shipments of advanced AI-capable chips to China [1].
Geopolitical ramifications
The timing of this decision is particularly sensitive given the upcoming U.S. political transition. China’s Foreign Minister Wang Yi has urged cooperation with the incoming Trump administration [3], while President Xi Jinping emphasized that ‘no winners emerge from tariff or technology wars’ [3]. The U.S. plans to add 200 Chinese semiconductor companies to its trade blacklist [2], signaling an intensification of technology restrictions that could further strain bilateral relations.
Industry compliance and investigation
TSMC has maintained compliance with U.S. restrictions, having ceased direct supplies to Huawei since 2020 [1]. The company initiated a detailed investigation following the discovery of its chip in Huawei’s processor [1]. Meanwhile, Huawei continues its technological advancement, planning to commence mass production of its Ascend 910C in early 2025 [1]. Sophgo, co-founded by Micree Zhan who owns 23% of Xiamen Sophgo Technologies Ltd, maintains it has never engaged in business with Huawei [1].