The U.S. Commerce Department is currently investigating DeepSeek, a Chinese company known for its impressive AI model performance, to determine whether it has been utilizing U.S. chips that are prohibited from being exported to China, according to a source familiar with the situation.
Last week, DeepSeek introduced a free AI assistant that claims to utilize significantly less data while costing much less than comparable U.S. models. The introduction of the app quickly made it the most downloaded on Apple’s App Store, raising alarms about the United States’ leadership in the AI sector and leading to a downturn that saw approximately $1 trillion (around ₹86,63,626 crore) in market value for U.S. tech stocks evaporate.
Current U.S. restrictions specifically target Nvidia’s AI processors, aiming to prevent the most advanced chips from being exported to China.
Reports indicate that organized smuggling of AI chips to China has been documented from several nations, including Malaysia, Singapore, and the United Arab Emirates, according to the aforementioned source.
The Commerce Department, along with DeepSeek, has not yet responded to inquiries for comment.
An Nvidia spokesperson mentioned that many of their clients operate in Singapore and utilize these entities for products intended for the U.S. and Western markets.
“We require that our partners adhere to all relevant laws, and we will take appropriate action if we receive credible information indicating otherwise,” the spokesperson stated.
DeepSeek has indicated that it legally acquired Nvidia’s H800 chips in 2023, although it remains unclear if the company has utilized other restricted chips that are forbidden from being sent to China.
Additionally, DeepSeek reportedly has access to Nvidia’s less potent H20 chips, which can still be legally exported to China. The Biden administration had contemplated placing restrictions on these chips, a discussion that has continued under the new Trump administration officials.
The CEO of AI firm Anthropic, Dario Amodei, expressed earlier this week that “it seems a significant portion of DeepSeek’s AI chip inventory includes chips that haven’t been banned but should be, some that were shipped prior to the ban, and others that likely have been smuggled.”
The U.S. government has established a series of restrictions limiting AI chip exports to China, with plans to further implement caps on shipments to various other nations.
© Thomson Reuters 2025
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