During his year-long Information Controls Fellowship Program (ICFP), Chiang Min-yen explored the development of AI chips in China, reviewing the intersection of Chinese digital totalitarianism and emerging trends of AI chips—with a view from the global supply chain.
By Chiang Min-yen
The Chinese Communist Party’s digital authoritarianism increasingly relies on advances in AI and chip technology to expand the scope of its information control regime. To thwart China’s abuse of this sophisticated technology for repressive censorship and surveillance, and prevent it from gaining a technological advantage, the U.S. government tightened export controls on chips produced by Taiwan Semiconductor Manufacturing Company (TSMC)—the world’s largest chip manufacturer and a critical player driving technological innovations in fields such as AI and quantum computing. This effort stems from revelations that advanced TSMC chips were found in Chinese AI products, in violation of trade restrictions. TSMC may even face a penalty of $1 billion or more to settle a U.S. investigation over a chip that made it into a Huawei AI processor, another violation of U.S. export controls.
How could such violations occur despite TSMC’s apparent compliance with regulations? What lapses or circumventions of export controls are empowering China’s AI technology advancement?
With support from Open Technology Fund, I researched the “remote poaching” models that Chinese company Bitmain has used to acquire Taiwanese expertise and technology, in contravention of Taiwanese laws and U.S. export controls. The report, summarized in the “Remote Poaching” section below, sheds light on the linkages between Taiwan’s semiconductor industry and Huawei’s “shadow network”—a collection of secret semiconductor-fabrication facilities across China which are under names of other companies, potentially helping Huawei circumvent U.S. government industrial and national security policies and regulations.
Background: Export Controls Targeting AI Chips
The United States initially limited exports of advanced semiconductors to China in 2022, restricting U.S. persons from serving in China’s semiconductor sector and prohibiting certain AI chips from reaching China. In late 2023, the Biden administration further tightened export controls on custom AI chips to China, closing a critical loophole that had enabled companies to furnish China with prohibited technology through foreign subsidiaries.
In October 2024, a Canada-based research group found a TSMC Ascend 910b chip inside a Huawei device. This discovery led TSMC to immediately halt shipments to Sophgo—a company that has been a key supplier for China’s surveillance infrastructure and is linked to Bitmain. Later that month, the U.S. House Select Committee on the Chinese Communist Party (CCP) instructed the Department of Commerce and TSMC to explain how an advanced Taiwanese chip could enter the Huawei supply chain. Although TSMC may have been unaware initially of the illegal use of its AI chip, the 2024 violation was severe. TSMC’s chipmaking equipment includes U.S. technology and therefore its Taiwan factories are subject to U.S. export controls. These regulations prevent TSMC from making chips for Huawei, or producing certain advanced chips for any customer in China without a U.S. license.
By November, the Taiwanese government’s restrictions on shipments to China expanded to a comprehensive cutoff of chips at the 7nm threshold (to prevent China from acquiring the most advanced chip technology), accelerating the technological decoupling between the U.S. and China. In its final weeks in office, the Biden administration announced additional export controls on AI chips, while it also locked in up to six billion dollars in grants to support TSMC chip manufacturing in the state of Arizona.
AI Chips and Digital Authoritarianism: The Role of Bitmain & Sopgho
Sopgho’s (the company at the center of recent violations of U.S. export controls) role in the cat-and-mouse game between Taiwanese authorities and the Chinese chip industry dates back to 2021, when its affiliate Bitmain faced prosecution for using shell companies to effectively conduct clandestine chip development in Taiwan.
Bitmain, a longtime leader in cryptocurrency technology, started investing in AI chip R&D as early as 2015. After the 2021 accusations against Bitmain, however, Sopgho—a company formed in 2019 by one of Bitmain’s co-founders—emerged as a source of continued AI chip design and development to fuel China’s population-scale advanced surveillance and digital monitoring capabilities. An examination of Sopgho’s website, for example, reveals numerous projects in Yunnan, Shangdon, the Ningxia Autonomous Region, and Fujian that are aligned with China’s “urban governance” or “smart cities” strategy—a framework inseparable from authoritarian control.
Sophgo collaboration with Chinese local governments
on digital surveillance (Xiamen, Nov. 20, 2021)
Sophgo also provides generative AI content-moderation tools that have been endorsed by Chinese authorities and are already in use across Beijing, Guangdong, Henan, Qinghai, Jiangsu, and Zhejiang.
These technologies that enable the CCP’s control require the most sophisticated AI and semiconductors on the market, which the U.S. and Taiwanese governments have attempted to disrupt. So how are companies like Bitmain, Sophgo, and others still acquiring state-of-the-art chips to maintain an expansive, ever-evolving information control regime?
Example of Sophgo “Smart City” Product Function Diagram
“Remote Poaching:” Chinese Funding and Taiwanese Talent
My research report, published in August 2024, explores how Bitmain created a shadow network—comprising offshore hiring and the creation of Taiwanese business entities—to access talent and technologies remotely while bypassing some of the formal scrutiny Chinese companies face in Taiwan’s tech sector.
Bitmain’s Remote Poaching Model
Notes: “Direct instructions” refer to a de facto operational command relationship, even in the absence of formal equity ties (according to official investigative documents from Taiwanese authorities). “Control” refers to holding a majority stake in the company.
Before 2021, Bitmain used two primary methods to bypass Taiwan’s trade restrictions and subvert AI chip policy in order to accelerate chip development using Taiwanese resources:
- Direct Operations in Taiwan: According to Taiwan’s New Taipei District Prosecutors Office, Bitmain established the Taiwanese entity “IC Link” in 2017 in order to recruit Taiwanese tech talent. In 2018 local semiconductor giant MediaTek issued a formal warning to Bitmain, based on its aggressive recruitment from Taiwanese firms and its potential violations of trade secrets laws.
- Remote Poaching: In 2019, Bitmain spun off its edge AI chip business to “Beijing Jingshi,” a Chinese company. Investigations revealed that Bitmain, through Beijing Jingshi and the Taiwanese company “WiseCore Tech,” placed orders with TSMC and also contracted Advanced Semiconductor Engineering (ASE) for packaging and testing. WiseCore Tech, which was staffed with engineers recruited from IC Link, allowed Bitmain to utilize Taiwanese expertise remotely without requiring staff to relocate to China.
While the Taiwanese government’s crackdown on Bitmain disrupted the company’s efforts, its affiliate Sopgho seems to be carrying on with the same subversive practices, as AI chip products from Beijing Jingshi were integrated into the latter’s products.
OSINT and Expanding the Research Community
Understanding how China is acquiring Taiwanese semiconductors and developing AI technology to support repressive censorship and surveillance is essential to counter the CCP’s information control regime.
My research showing the linkages between Taiwan’s semiconductor industry and Huawei’s “shadow network” can serve as a prototype for analyzing other instances of Chinese poaching in Taiwan’s semiconductor sector, and provide a reference for the global integrated circuit design industry as it seeks to address Chinese technology acquisition.
For those interested in exploring this topic further, I invite you to read my research report. I also published an op-ed in The Diplomat discussing the impact and limitations of Taiwan’s economic security framework (authorities thwarted Bitmain’s remote poaching through a criminal investigation, not via the standard investment review processes that support Taiwan’s economic security framework). During my OTF fellowship, I also published additional analyses on the effectiveness of Taiwan’s outbound investment review system for the AI supply chain.
My research was conducted using Open Source Intelligence (OSINT) methods, which have enabled me to share my findings with civil society because they do not rely on classified information. This replicable approach can enable other researchers to generate new insights into China’s semiconductor supply chain and its use of advanced chips in digital authoritarianism. To promote broader engagement, I compiled a detailed Methodology for Information Retrieval, in the hopes that other researchers will contribute and foster meaningful dialogue in this emerging field. Readers interested in these methods and perspectives are encouraged to reach out to me.
About the program: OTF’s Information Controls Fellowship Program (ICFP) supports examination into how authoritarian governments are restricting the free flow of information, impeding access to the open internet, and implementing repressive censorship mechanisms, thereby threatening the ability of global citizens to exercise their fundamental rights online. The program supports fellows to work within host organizations that are established centers of expertise by offering competitively paid fellowships for three, six, nine, or twelve months in duration.