The United States Commerce Department is investigating whether DeepSeek, the Chinese company behind the AI model that made waves in the tech world, has been using U.S. chips prohibited from being shipped to China, according to a source familiar with the matter.
Last week, China’s DeepSeek launched a free assistant it claims uses less data at a fraction of the cost of U.S. models.
Within days, it became the most downloaded app on Apple’s App Store, raising concerns over the U.S.’s dominance in AI and triggering a sell-off that erased around $1 trillion from U.S. technology stocks.
Current restrictions on Nvidia’s artificial intelligence processors are designed to prevent the most advanced chips from reaching China.
The source also noted that organized AI chip smuggling operations have been traced from countries such as Malaysia, Singapore, and the United Arab Emirates to China, according to Reuters.
The Commerce Department and DeepSeek did not immediately respond to requests for comment.
An Nvidia spokesperson stated that many of its customers have business entities in Singapore and use those entities for products intended for the U.S. 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 has stated that it used Nvidia’s H800 chips, which it could have legally purchased in 2023.
However, it could not be confirmed whether DeepSeek has used other controlled chips that are prohibited from being shipped to China.
DeepSeek is also reportedly using Nvidia’s less powerful H20 chips, which can still be legally shipped to China. The U.S. had considered controlling these chips under the Biden administration, and newly appointed Trump officials are also discussing the possibility.
The CEO of AI company Anthropic, Dario Amodei, said earlier this week, “it appears that a substantial fraction of DeepSeek’s AI chip fleet consists of chips that haven’t been banned (but should be), chips that were shipped before they were banned; and some that seem very likely to have been smuggled.”
