According to a source familiar with the situation, the US Commerce Department is examining whether DeepSeek, the Chinese company whose AI model recently stunned the tech industry, has been utilizing US chips that are prohibited from being shipped to China.
Last week, China’s DeepSeek introduced a free assistant that claims to use significantly less data and costs a fraction of US models. In just a few days, it became the most downloaded app on Apple’s App Store, raising concerns about the United States’ dominance in AI. This triggered a market reaction, erasing about $1 trillion from US technology stocks.
Restrictions on Nvidia’s AI processors aim to prevent the most advanced chips from being accessible in China.
According to the source, organized smuggling of AI chips to China has been traced back to countries such as Malaysia, Singapore, and the United Arab Emirates.
An Nvidia representative stated that numerous customers have business entities in Singapore that are utilized for products aimed at the US and Western markets.
“We insist that our partners comply with all applicable laws, and if we receive any information to the contrary, act accordingly,” Nvidia said.
DeepSeek reportedly utilized Nvidia’s H800 chips, which they could have legally acquired in 2023. However, Reuters could not confirm if DeepSeek employed any other restricted chips prohibited from shipping to China.
DeepSeek also reportedly possesses Nvidia’s H20s, a less powerful model that can still legally export to China. The US had considered regulating these under the Biden administration, and newly appointed Trump officials are also reviewing this.
Earlier this week, Dario Amodei, CEO of AI company Anthropic, stated, “A significant portion of DeepSeek’s AI chip inventory includes chips that should be banned but aren’t, chips shipped before any bans were imposed and some that appear to have been smuggled.”
