DeepSeek Accused of Using Smuggled Nvidia Chips — Sparks Controversy in AI Race

DeepSeek, a Chinese AI startup, is the target of recent allegations that it used banned Nvidia chips to build its latest models.

The Information states that several thousand powerful Blackwell chips have been smuggled into the country by DeepSeek to use in building and training its newest AI model.

Nvidia's Blackwell chips are reportedly banned by the US from export to China, curbing China's attempts to lead AI technology in the US and around the world.

Nvidia Denies Claims of Smuggled Blackwell Chips

In a report by the Decoder, sources reveal that the banned chips were shipped to Southeast Asian data centres and were subsequently tested and installed by Nvidia and partners. Allegedly, the servers were disassembled, quietly moved around, and reassembled once it reached the facilities in China.

However, Nvidia denies any evidence of these data centres and confirms it is looking into these reports. Reuters reports that Nvidia may also be developing a feature that allows them to track the physical locations of their Blackwell chips and any future models, a response that could potentially minimise the risk of their hardware being smuggled in the future.

In a report by CNBC, an Nvidia spokesperson released a statement that says, 'We haven't seen any substantiation or received tips of 'phantom data centers' constructed to deceive us and our [original equipment manufacturer] partners, then deconstructed, smuggled and reconstructed somewhere else.' He continues, 'While such smuggling seems far-fetched, we pursue any tip we receive.'

The Trump Intervention

Nvidia has so far been leading the AI industry in the US, manufacturing hardware, including GPUs critical for advancing the AI technology, says CNBC. And since these are vital to AI technology's advancement, Nvidia's engagement with China has drawn scrutiny from US lawmakers. Trump had earlier allowed Nvidia's AI chips to be sold to China, but he faced resistance from Republicans.

His Monday announcement, which can be seen in this post by Truth Social, states that he is allowing Nvidia to sell its H200 AI chips to China, granted the US government receives 25% of the sales, suggesting it could 'support American jobs', and stating it could 'benefit the American taxpayers'.

An Oversight?

These allegations put further spotlight on a bigger issue: DeepSeek and other AI companies' transparency and the extent of external oversight the industry is currently facing, where anomalous or unlawful activities can be easily hidden from the public eye. These can go from hardware sourcing to AI testing.

As AI technology continues to advance, the gap between legal systems and technological innovation continues to widen. At present, laws that allow organisations to monitor and impose regulations on whether companies are operating under legitimate conditions have yet to be established, leaving the AI world in a severely obscure state.

Trump's decision to back Nvidia's sales to China, however, only creates a political angle on the allegations against DeepSeek. By putting a direct line between revenue and sales to China, President Trump only creates a question of whether the government is geared towards incentives and revenue over national security. And to the citizens, national security should come first.