Bitmain, Co-Founder Deny Involvement in Reported US Probe on Huawei

TSMC has reportedly cut off Chinese chip firm Xiamen Sophgo, which is linked to Bitmain co-founder and chairman Micree Zhan, amid a U.S. investigation into a possible violation of sanctions on Huawei.

On Saturday, The Information reported that TSMC ceased chip supplies to Sophgo earlier this month when the U.S. Commerce Department began investigating whether TSMC had provided chips to Huawei, which has been under U.S. sanctions since 2020 due to national security concerns.

The report did not confirm that Xiamen Sophgo directly supplied chips to Huawei after acquiring them from TSMC, and it remains unclear whether or to what extent Bitmain’s relationship with TSMC might be impacted. Bitmain is currently the largest Bitcoin ASIC designer and mining hardware manufacturer.

The Information, citing two people familiar with the matter, noted that the U.S. Commerce Department and TSMC recently found that “chips TSMC made for Xiamen Sophgo had designs similar to those of Huawei’s artificial intelligence chips.”

In a written statement released on Sunday, Xiamen Sophgo did not deny the reported cutoff but said it “has never been engaged in any direct or indirect business relationship with Huawei.” It has also provided a “detailed investigation report” to TSMC to prove that it is not related to the Huawei investigation.

In a media statement released Monday, Bitmain said that it is “not involved in or otherwise related to the supply chain investigation as reported by the media recently.” In an email reaching out to TheEnergyMag, the company further clarified that Zhan is also not involved in or related to the reported supply chain investigation.

According to The Information, Xiamen Sophgo was founded by Zhan in 2019, and TSMC shipped “hundreds of thousands of chips” to the company until this month. A Chinese corporate registration database indicates that Zhan indirectly owns approximately 22% of Sophgo. The report added that some of Xiamen Sophgo’s subsidiaries and Bitmain share domain registries and email contacts.

Semiconductor research firm TechInsights recently analyzed Huawei’s latest AI chip, the HiSilicon Ascend 910B, and discovered that it was fabricated by TSMC, in contrast to the Ascend 910A, which was made by China’s domestic chipmaker SMIC. TechInsights informed TSMC of these findings.

Earlier this month, The Information reported that the Commerce Department was probing whether TSMC had been manufacturing AI or smartphone chips for Huawei. Bloomberg later reported that TSMC had stopped shipments to an unnamed client around the time of the U.S. investigation.

Bitmain began exploring AI chip development in 2018 under Zhan’s leadership, aiming to diversify its chip portfolio. This strategic shift created friction between Zhan and co-founder Jihan Wu, who believed the company should focus solely on Bitcoin ASIC development.

This divergence, as well as other management issues, ultimately led to an internal power struggle, resulting in Zhan’s ousting in an October 2019 coup just as he was introducing Bitmain’s “third-generation AI chip,” the Sophgo BM1684, at a conference in Shenzhen. Xiamen Sophgo still advertises BM1684 chips on its website.

Wu and Zhan reached a settlement in 2021 with Zhan’s return as chairman and Wu’s departing from Bitmain to head Bitdeer (NASDAQ: BTDR) and Matrixport. Bitmain dropped direct AI chip development since then.

Image of Zhan via Chinese internet