"The exception applies to software delivered inside auxiliary and low-level processors and FPGAs, within which software installation is not intended after the user obtains the product. This can include, for instance, microcode inside a processor, firmware built into an I/O device, or the gate pattern of an FPGA. The software in such secondary processors does not count as product software." http://www.fsf.org/resources/hw/endorsement/criteria
Because of this there is no "closed source" product software in a Loongson system.
My second argument was if something act like hardware then it is hardware for example a CDROM is a CDROM software or hardware? In my point of view a CD ROM is hardware. The data are inseparably connected the CD ROM because of this its hardware no matter if the source code of the data is free or not.
For the question hardware or software the "data" inside the hardware is not a valid criteria. To clear the question the only valid criteria is: Inseparably connected and unchangeable.
Example CDROM: The data inside of the CD ROM is inseparably connected and unchangeable because of this its hardware.
Example Loongson cpu: The data in the microcode is inseparably connected and unchangeable because of this its hardware.
And I do have a 3. additional argument because open source vs closed source is a question about copyright. But there is no copyright in 100% pure logic trivial functions because of this the microcode cannot contain any copyright because the creation spiritual height do not hit the minimum criteria to get copyright protection by law. This means you can not protect microcode source code with any copyright.