Asianfin -- Taiwan Semiconductor Manufacturing Company (TSMC) has reportedly suspended shipments to Chinese chip designer Sophgo after discovering a TSMC-produced chip in a Huawei AI processor, Reuters reported citing sources familiar with the situation.

Sophgo, which had placed orders for chips matching those in Huawei's Ascend 910B processor, is under scrutiny as Huawei remains restricted from accessing U.S. technology due to national security concerns.

Sophgo issued a statement on its website on Sunday, affirming compliance with all regulations and denying any business ties with Huawei. The company, an affiliate of cryptocurrency hardware firm Bitmain, stated it had submitted a detailed investigation report to TSMC to demonstrate no connection to Huawei.

TSMC declined to comment, and Huawei did not immediately respond to inquiries. The U.S. Department of Commerce acknowledged awareness of the reported export control issue but refrained from commenting on any potential investigation.