TSMC Severs Ties with Bitmain-Linked Firm, Xiamen Sophgo, Following Huawei Link Probe
Taiwan's semiconductor giant stops orders to Xiamen Sophgo. Potential restrictions on Bitmain could reshape Bitcoin mining, affecting hash rates and profitability.
The Taiwan Semiconductor Manufacturing Company (TSMC) has reportedly ceased supplying chips to Xiamen Sophgo, an AI chip firm based in China.
This decision comes amid an investigation by the U.S. Department of Commerce into a possible violation of U.S. sanctions against Huawei. Since 2020, due to national security concerns, the U.S. has barred Huawei from accessing advanced technology.
Xiamen Sophgo and Bitmain’s Connection
Bitmain is the world’s largest Bitcoin ASIC designer and mining hardware manufacturer company based in Beijing, China. It specializes in the design of application-specific integrated circuit (ASIC) chips specifically for Bitcoin mining.
Xiamen Sophgo, founded by Bitmain’s co-founder and chairman Micree Zhan in 2019, has played an increasingly prominent role in China’s AI chip market. He currently owns approximately 22% of the company and has maintained substantial orders with TSMC.
Investigative Findings of TSMC
TSMC’s decision to halt chip supplies was a result of an alert by TechInsights, a semiconductor research firm, showing similarities between their chip and Huawei’s latest AI chip.
TechInsights examined Huawei’s latest AI chip, the HiSilicon Ascend 910B, and determined that TSMC had produced this chip, after comparing it with the older Ascend 910A model, fabricated by China’s SMIC.
Subsequent investigations further showed that semiconductor chips TSMC manufactured for Xiamen Sophgo shared design similarities with Huawei’s Ascend AI chips, raising concerns about the company indirectly supplying Huawei.
Possible Implications for the Crypto Market
While there has been no confirmed evidence that Sophgo directly supplied Huawei with chips, the probe has cast a spotlight on the intricate relationships between the semiconductor industry and the global crypto market.
Bitmain, the world’s largest designer and manufacturer of Bitcoin mining machines and mining chips, relies heavily on TSMC for advanced semiconductor technology.
Although the current probe focuses on Xiamen Sophgo, any further scrutiny of Bitmain’s dealings with TSMC could restrict its access to high-performance chips. A reduction in supply would potentially slow down Bitcoin’s network expansion and intensify competition between Bitcoin miners.
Furthermore, if Bitmain is restricted, the inaccessibility to high-performance semiconductors could cause production challenges for Bitcoin miners.
For small and medium-sized miners, increased hardware prices could reduce profit margins, leading some to scale back operations. With limited mining, the global Bitcoin hash rate could be affected, potentially influencing Bitcoin’s security and transaction processing speed.
