Bitcoin Miner Bitmain Caught Up In This Regulatory Crossfire

October 26, 2024 Blockgates Bitcoin Comments Off on Bitcoin Miner Bitmain Caught Up In This Regulatory Crossfire

Taiwan Semiconductors Manufacturing Company (TSMC) reportedly halted chip shipments to Xiamen Sophgo, a Chinese semiconductor firm linked with Bitmain co-founder and chairman Micree Zhan, amid an ongoing US investigation into possible sanctions violations related to Huawei.

According to a reports, TSMC stopped supplying chips to Sophgo earlier this month after the US Commerce Department launched an investigation into whether TSMC had indirectly supplied chips to Huawei.

Huawei has been under US sanctions since 2020 over national security concerns, with strict restrictions on its access to advanced technology.

TSMC Cuts Off Bitmain-Linked Firm Over Huawei Chip

TSMC has halted shipments to the China-based chip designer Sophgo, an AI company associated with Bitmain. This happened after a chip from the Taiwan-based chipmaker was discovered inside a Huawei AI processor.

Sophgo had reportedly ordered chips with TSMC identical to those used in the Huawei Ascend processor.

This is amidst restrictions from acquiring such technology to prevent Huawei from doing so to protect US national security interests.

No confirmation has been made that Xiamen Sophgo directly supplies chips to Huawei. Still, the key question is how this situation would affect the miner’s ongoing relationship with TSMC. Bitmain is a privately held company based in Beijing, China. It specializes in the design of application-specific integrated circuit (ASIC) chips specifically for Bitcoin mining.

Sources reported that the Commerce Department and TSMC recently discovered that some semiconductors TSMC produced for Xiamen Sophgo share design similarities with the chips that Huawei uses in AI-enabled computing.

Sophgo Under Scrutiny After TSMC Halts Shipments

Zhan started Xiamen Sophgo in 2019. The chipmaker TSMC provided the company hundreds of thousands of chips before their recent suspensions. According to the Chinese corporate records, it was verified that Zhan indirectly owns approximately 22% of Sophgo. He also owns and several subsidiaries of the latter have domain registrations and email contacts with the miner.

TechInsights’ teardown of Huawei’s latest AI chip, the HiSilicon Ascend 910B, found that TSMC fabricated the chip. This is in contrast to the predecessor of the Ascend 910B, the Ascend 910A, which was fabricated by China’s domestic chipmaker, SMIC. Following the discovery, TechInsights notified TSMC of its findings.

In early October, the US Commerce Department inquired whether TSMC produced AI or phone chips for Huawei. Subsequently, it was reported that TSMC had stopped shipping products to a customer whose identity was not revealed, coinciding with the timing of the U.S. probe.

Under Micree Zhan’s leadership, Bitmain entered AI chip development in 2018 as part of its strategy to diversify its chip offerings. The move brought Zhan into conflict with his co-founder, Jihan Wu, who wanted the company to stick with its core business of developing Bitcoin ASICs.

Abandoning AI Chips After Internal Strife

All these disagreements, along with various management issues, ultimately escalated into a corporate struggle for control of the miner. The dispute was between Zhan and the co-founder, Jihan Wu, leading to Zhan’s ousting in October 2019.

Ironically, this happened just as he prepared to announce its “third-generation AI chip,” the Sophgo BM1684, at a Shenzhen conference. Today, the chips remain marketed on Xiamen Sophgo’s website.

The two settled on a deal in 2021 that allowed Zhan to return as chairman. Wu left Bitmain to assume leadership roles at Bitdeer and Matrixport. Since then, the company has stopped its direct involvement in developing AI chips.

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Teuta

Teuta is a seasoned writer and editor with over 15 years of experience in macroeconomics, technology, and the cryptocurrency and blockchain industries. Starting her career in 2005 as a lifestyle writer for Cosmopolitan in Croatia, she expanded into covering business and economy for several esteemed publications like Forbes and Bloomberg. Influenced by figures like Don Tapscott and Bruce Dickinson, Teuta embraced the blockchain revolution, believing crypto to be one of humanity’s most crucial inventions. Her fintech involvement began in 2014, focusing on crypto, blockchain, NFTs, and Web3. Known for her excellent teamwork and communication skills, Teuta holds a double MA in Political Science and Law, enjoys punk rock, chablis, and has a passion for shoes.

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