In an update to the TSMC chip found in a Huawei device, foreign media is now reporting Sophgo as the company likely helping Huawei illegally procure TSMC chips for their products.
Last Thursday, TSMC was alerted that one of their 7-nanometer processors was found by a third company inside a Huawei device, which could qualify as a breach of U.S. export restrictions. TSMC maintained that they stopped shipping to Huawei four years ago, in agreement with US restrictions, and now foreign reports seem to have identified the source of the leak.
Sophgo, owned by the Chinese cryptocurrency mining equipment manufacturer Bitmain, has been named as the likely culprit who assisted in illegally transferring TSMC technology. In response, TSMC has stopped shipments to Sophgo, despite the company denying any business relationships with Huawei.
Responding to the matter on Monday, Senior Industry Analyst Chen Tzu-ang (陳子昂) said that TSMC had fully cooperated with the US according to KYC protocol. KYC, or Know Your Customer procedures, are the means by which a company or financial institution verifies the identity of its customers. Chen said China is likely to continue to resort to underhanded tactics to sidestep the US technological blockade, with the US responding by further increasing pressure in the face of this breach.
Chen believes that the most probable outcome of such outside pressures is that TSMC will begin to prioritize non-Chinese affiliated orders. While this may have other adverse consequences, it could seem like a safer bet for the company to focus on customers from the US, Europe, and Japan.
Chen pointed out that Chinese customers may turn to competitors such as Samsung or Intel for processors – as for TSMC, given its current status in the chip industry, the impact of such a pivot would be limited.