TSMC has halted shipments to Chinese chip designer Sophgo after a chip it manufactured was reportedly found in a Huawei AI processor, according to Reuters, which cited two sources familiar with the situation.

The Reuters report noted that Sophgo had ordered chips from TSMC identical to the one detected in Huawei’s Ascend 910B processor. Huawei, restricted from acquiring certain technology to protect U.S. national security, is under stringent export controls. However, Reuters reported that it remains unclear how the chip ended up in Huawei’s product.

On Sunday, Sophgo posted a statement on its website asserting it has never engaged in any direct or indirect business relationship with Huawei and conducts its operations in strict compliance with all applicable laws, including U.S. export control regulations. The company affirmed it has never breached any of these laws or regulations.

Sophgo, which is affiliated with cryptocurrency mining equipment maker Bitmain, also noted it had submitted a detailed investigation report to TSMC to confirm its non-involvement with Huawei.

TSMC declined to comment, according to Reuters, while Huawei has not yet responded to requests for comment. The U.S. Department of Commerce acknowledged awareness of potential export control violations but declined to comment on any active investigations.

(Photo credit: Sophgo)