The US Commerce Department has launched an investigation into whether China’s DeepSeek utilized American AI chips that were prohibited from export to China, a source familiar with the matter revealed.
DeepSeek recently gained attention after introducing an AI assistant capable of operating with reduced data and significantly lower costs than US models. The app quickly became the most downloaded on Apple’s App Store, raising concerns about America’s leadership in artificial intelligence.
This development triggered a sharp sell-off in US tech stocks, erasing nearly $1 trillion in market value.
The restrictions on Nvidia’s AI processors were intended to prevent China from accessing the company’s most advanced chips. However, AI chip smuggling into China has been traced through various countries, including Malaysia, Singapore, and the UAE, the source added.
Both the Commerce Department and DeepSeek have not yet responded to requests for comment.
A spokesperson for Nvidia confirmed that many of its customers operate business entities in Singapore for shipments to the US and Western markets. “We require our partners to comply with all applicable laws and take action if we find otherwise,” Nvidia stated.
Singapore’s trade ministry, citing Nvidia’s remarks, stated on Saturday that there was no reason to believe DeepSeek had obtained any export-controlled products from Singapore. While it did not confirm whether the Chinese firm accessed restricted Nvidia chips through intermediaries, the ministry emphasized Singapore’s commitment to upholding the rule of law.
“We expect US companies, including Nvidia, to adhere to US export controls and our domestic regulations,” the ministry said. “Our customs and law enforcement agencies will continue working closely with US counterparts.”
DeepSeek claimed it legally purchased Nvidia’s H800 chips in 2023. Reuters has not determined whether the company acquired other restricted AI chips barred from export to China.
Reports suggest that DeepSeek also possesses Nvidia’s H20 chips, which are still legally available for shipment to China. The Biden administration had considered restricting their sale, while newly appointed officials in the Trump administration have begun discussions on the matter.
Anthropic CEO Dario Amodei remarked earlier this week, “It appears that a significant portion of DeepSeek’s AI chip fleet includes chips that haven’t been banned (but should be), chips shipped before restrictions were imposed, and some that seem highly likely to have been smuggled.”
The US has already imposed sweeping restrictions on AI chip exports to China and is preparing to expand these controls to additional countries.
