The U.S. Commerce Department is investigating whether DeepSeek has used Nvidia chips that are banned from export to China.
This comes after DeepSeek launched a powerful AI model that gained massive attention in the tech world, according to a source familiar with the matter.
DeepSeek recently introduced a free AI assistant, claiming it requires less data and is much cheaper to operate than similar U.S.-developed models.
The app quickly became the most downloaded on Apple’s App Store, raising concerns about the U.S.’s leading position in AI technology.
The announcement also triggered a selloff in the stock market, wiping out nearly $1 trillion from U.S. tech companies’ market value.
U.S. rules currently prevent Nvidia’s most advanced AI chips from being sold to China.
However, reports suggest that some of these restricted chips have been smuggled into China through countries like Malaysia, Singapore, and the United Arab Emirates, the source added.
Neither DeepSeek nor the U.S. Commerce Department has responded to requests for comments.
Nvidia stated that some of its customers operate through Singapore-based entities for products meant for Western markets.
The company emphasized that it follows all laws and will take action if it finds any violations.
DeepSeek has publicly confirmed that it uses Nvidia’s H800 chips, which were legally available in 2023.
The company also reportedly uses Nvidia’s H20 chips, which are still allowed for export to China.
While the Biden administration previously considered restricting these chips, the new Trump-led officials are now reviewing the matter again.
Dario Amodei, CEO of AI company Anthropic, recently suggested that DeepSeek may be using a mix of legally allowed chips, older shipments from before the restrictions, and possibly some smuggled hardware.
The U.S. government has been enforcing strict rules to prevent China from accessing advanced AI technology and is now considering expanding these restrictions to other countries as well.
