The U.S. government will add Chinese technology company Sophgo to the Commerce Department’s Entity List Blacklisted middleman between Huawei and TSMCReport Reuters. For Sophgo, being placed on the Entity List means it will no longer be able to purchase advanced chips, effectively marking the end of its business. On the other hand, Huawei may try to find other middlemen to order different chips from TSMC.
Since September 2020, Huawei has been unable to legally purchase chips made with U.S. technology (that is, almost all chips). Sophgo violated U.S. export regulations, prompting the U.S. Department of Commerce to add it to the Bureau of Industry and Information Technology Safetylist of entities. Companies on the Entity List face strict export restrictions and require shipping licenses, which are often denied. As a result, Sophgo will be unable to place orders with TSMC or purchase wafers outside of China, which spells the end for the company.
Earlier this year, Sophgo orders Virtuvian computing chips designed by Huawei The company collaborated with TSMC to develop the Ascend 910 processor in violation of U.S. sanctions. Research firm TechInsights discovered the issue during a teardown of Huawei’s Ascend 910 processor. After TSMC confirmed the match, it stopped shipments to Sophgo and alerted U.S. and Taiwanese authorities.
Sophgo is part of Bitmain, a Chinese Bitcoin mining equipment supplier. The company is partly owned by Bitmain co-founder Ketuan Zhan, who indirectly holds a 23% stake in Sophgo through an investment company. Reuters reports that although Sophgo denies any direct or indirect business with Huawei, Bitmain and Sophgo have reportedly supplied artificial intelligence processors to Chinese government entities, including state-owned enterprises, universities and police departments.
Bitmain, best known for its Antminer brand, is a major supplier of cryptocurrency mining hardware. The company has distanced itself from the controversy and said it is not involved in the investigation. However, Sophgo used a Bitmain email address to communicate with the FCC in 2023, clearly showing a connection between the two companies.
Although Huawei and other Chinese entities will not be able to use Sophgo to source advanced chips, it appears to be common practice to use proxies to obtain complex processors that they should not be able to obtain. At this time, no one knows how many more middlemen Huawei might use to obtain these products.