TAIPEI, Taiwan >> The U.S. government has spent years weaving a web of controls to prevent Chinese companies from being able to buy or make cutting-edge computer chips.
But several weeks ago, the maker of the world’s most advanced chips, Taiwan Semiconductor Manufacturing Co., learned that some of its chips had ended up in devices made by Huawei, a Chinese telecommunications giant under U.S. sanctions, according to two Taiwanese government officials who were not authorized to speak publicly.
TSMC, which manufactures chips for tech giants like Apple and Nvidia, said that it had not supplied chips to Huawei since those restrictions went into effect. But TSMC continues to supply other major companies in China, and concerns have been growing among U.S. officials that other companies could be routing products to Huawei.
The U.S. government has tried to keep advanced chips out of the hands of Chinese companies over concerns they could be used for military purposes. It has blocked Huawei and other Chinese firms from buying products made with U.S. technology and pushed companies in allied countries including Japan and the Netherlands to stop selling to them.
Still, chips used in artificial intelligence are actively traded in markets in China, despite U.S. restrictions, and Chinese companies have continued to develop the kind of technology that U.S. authorities are concerned about. They have made strides in AI systems and the advanced microchips that power them.
This progress, along with the presence of TSMC-made chips in Huawei devices, raises questions about how successful the U.S. controls have been at keeping advanced technology out of China, as well as how companies like TSMC vet their customers.
TSMC chips were found in the Ascend 910B, a Huawei processor that contains multiple types of computer chips and is used for training AI models, according to an industry analyst and a former U.S. government official familiar with the matter who spoke on the condition of anonymity because they were not authorized to speak publicly.
It is not clear how the TSMC chips ended up in the Huawei processors, or how many of those processors contained TSMC chips.
Chinese companies have gone to great lengths to get around the U.S. restrictions. Many, including Huawei, scrambled to buy American technology before the United States legally shut off sales. Some stockpiled thousands of chips, while others sourced them from a thriving underground marketplace of smugglers.
TSMC previously produced the chips for an earlier generation of the Huawei processor. A Huawei spokesperson said the company had not asked TSMC to produce any chips for it since the U.S. rule change in 2020. “We did stock up back then,” she said.
But the two people familiar with the matter said that a Chinese company had recently placed orders with TSMC for hundreds of thousands of chips in a design identical to one in a Huawei product.
One of the people said the Chinese company was Xiamen Sophgo Technologies, and that the orders were placed this year.
Sophgo was founded and is partly owned by Micree Zhan, CEO of Bitmain, a Chinese company that makes computers used to mine cryptocurrency and processors for AI systems. Bitmain is one of TSMC’s most significant Chinese customers, said Min-yen Chiang, a nonresident fellow at the Research Institute for Democracy, Society and Emerging Technology, a government-funded think tank in Taipei.
Sophgo said in a statement that it had never engaged in any direct or indirect business relationship with Huawei and that its business had never been in violation of any U.S. export control laws.
The Information first reported that the U.S. government was investigating whether TSMC had made chips for Huawei, and that TSMC had cut off shipments to Sophgo around the time the investigation began.
TSMC makes chips that are used to power everything from fighter jets to chatbots. As companies around the world have raced to develop advanced AI systems and the competition between the United States and China has intensified, demand for these chips has exploded.
U.S. government officials charged with enforcing export controls face a difficult task: writing rules that restrict what private companies do in their operations outside the United States, according to Jacob Feldgoise, an analyst at the Center for Security and Emerging Technology at Georgetown University and an author of a report about the capabilities of Huawei’s Ascend 910 chips.
TSMC said it maintained a robust export system for monitoring and ensuring compliance. “If we have any reason to believe there are potential issues, we will take prompt action to ensure compliance, including conducting investigations and proactively communicating with relevant parties, as we did in this situation,” the company said.