By Alexandra Alper and Karen Freifeld

(Reuters) – The Biden administration plans to blacklist a Chinese company whose TSMC-made chip was illegally incorporated into a Huawei AI processor, according to a person familiar with the matter.

Chip designer Sophgo, an affiliate of bitcoin mining equipment supplier Bitmain, is in the process of being placed on the U.S. Commerce Department’s Entity List, the person said.

A spokesperson for the Commerce Department declined comment.

Sophgo drew attention after ordering a chip from Taiwan Semiconductor Manufacturing Corp. (TSMC) that matched one found on Huawei’s Ascend 910B.

Companies are added to the Entity List for activities contrary to U.S. national security and foreign policy interests. Exporters are then barred from shipping goods and technology to them without a license, which is likely to be denied.

China’s Huawei, a telecommunications equipment maker and technology conglomerate, was placed on the list in 2019. Since 2020, it has been a violation to ship even foreign-made chips to the company without a license.

(Reporting by Karen Freifeld and Alexandra Alper; Editing by Chizu Nomiyama)