In open defiance of U.S. export restrictions, Chinese AI startup DeepSeek has trained its upcoming flagship AI model using thousands of NVIDIA Blackwell chips, which are completely banned from sale to China. An exclusive report by The Information, citing six sources familiar with the matter, has exposed the latest chapter in the intensifying U.S.-China chip war.
According to the report, the advanced chips reached China through a highly sophisticated smuggling network. They were first shipped to data centers in permitted countries (such as Singapore or Malaysia), assembled into servers, then disassembled and broken down into small components before being imported into China in suitcases or cargo shipments. The operation was complex enough to bypass NVIDIA’s compliance checks.
Why This Gives DeepSeek a Major Advantage
- Competitive Edge: Blackwell represents NVIDIA’s most advanced technology to date and is significantly more powerful than the H100 or H200 for training large AI models. Access to it gives DeepSeek a strong lead not only in the domestic Chinese market (valued at over $150 billion in AI) but also globally.
- Weakness of Domestic Alternatives: The Chinese government is aggressively promoting locally developed chips (such as Huawei’s Ascend series, but executives and employees at Chinese AI companies say these chips still fall short in training performance, suffering from frequent crashes, slow interconnects, and lower overall capability. For example, DeepSeek’s R2 model was reportedly delayed by three months when trained on Huawei hardware.
What It Means for U.S. Export Controls
This is not the first time DeepSeek has come under scrutiny. U.S. authorities were already investigating whether the company obtained restricted AI chips through third-party entities in countries like Singapore. While the Trump administration recently allowed limited exports of H200 chips to China with a 25% tariff, the Blackwell series remains fully banned. In response, NVIDIA has reportedly begun rolling out new location-tracking technology that can put chips into a “snitch” mode and send alerts if they are detected in prohibited regions.
Reaction on X (formerly Twitter) has been intense, with users calling it “the thriller version of the chip war” and noting that “capital always finds a way.”
Potential Impact on NVIDIA Stock
Following the news, NVIDIA shares rose 0.72% in after-hours trading, but longer-term concerns remain. Analysts warn that widespread smuggling undermines the effectiveness of U.S. bans, potentially allowing Chinese AI firms to advance rapidly and eventually reducing global demand for NVIDIA’s latest hardware. Despite the controversy, the company still expects 65% revenue growth in Q4, driven by the Blackwell production ramp-up. In a worst-case scenario of sustained large-scale smuggling, some models suggest NVDA’s valuation could drop as low as $77 per share.
The incident deepens the ongoing U.S.-China technology conflict, with AI supremacy hanging in the balance. Will U.S. controls tighten further, or will China’s creative smuggling networks prevail? Stay tuned for updates.
Comments
Post a Comment