The U.S. Commerce Department is investigating whether DeepSeek, the Chinese AI company behind a disruptive new model, has been using U.S.-made AI chips that are restricted from being shipped to China, according to a source familiar with the situation. DeepSeek’s free assistant, which launched last week, has been widely praised for its cost-effective performance and ability to process less data compared to U.S. models. It quickly became the most downloaded app on Apple’s App Store, raising concerns in the U.S. about its competitive edge in AI and contributing to a significant drop in the stock market, which wiped out around $1 trillion from U.S. tech stocks.
The current restrictions on advanced AI processors, particularly from Nvidia (NVDA.O), are designed to prevent China from accessing the most sophisticated chips that could enhance its AI capabilities. The U.S. has been tracking organized smuggling operations of these chips into China from countries such as Malaysia, Singapore, and the United Arab Emirates.
DeepSeek has reportedly used Nvidia’s H800 chips, which were legally purchased in 2023. However, the legality of DeepSeek’s access to other U.S. chips remains unclear. It is also known to have Nvidia’s H20 chips, which can be legally sold to China. Although there have been discussions within the U.S. government about placing more restrictions on these chips, the Biden administration and new Trump officials are also weighing tighter controls.
In response to these allegations, Nvidia emphasized that it requires its partners to comply with U.S. export laws, noting that many of its clients in Singapore might use the country as an intermediary for products destined for the U.S. and the West. However, the Singapore trade ministry stated that while there was no indication that DeepSeek obtained export-controlled chips from Singapore, it would continue to uphold the rule of law and cooperate with U.S. authorities.
DeepSeek has also been linked to the use of chips that, while not banned, have raised concerns among AI industry experts. Dario Amodei, CEO of Anthropic, expressed doubts over the legality of some of DeepSeek’s chips, suggesting that they could include smuggled or pre-banned processors.
The U.S. has imposed a range of restrictions on AI chip exports to China and is planning to extend these limits to other countries.
