US looking into whether DeepSeek used restricted AI chips, source says

(Reuters) - The U.S. Commerce Department is looking into whether DeepSeek - the Chinese company whose AI model's performance rocked the tech world - has been using U.S. chips that are not allowed to be shipped to China, a person familiar with the matter said.

China's DeepSeek last week launched a free assistant it says uses less data at a fraction of the cost of U.S. models. Within days, it became the most downloaded app in Apple's App Store and stirred concerns about United States' lead in AI, sparking a rout that wiped around $1 trillion off U.S. technology stocks.

Current restrictions on Nvidia artificial intelligence processors are meant to stop its most sophisticated chips from reaching China.

Organized AI chip smuggling to China has been tracked out of countries including Malaysia, Singapore and the United Arab Emirates, the source said.

The Commerce Department and DeepSeek did not immediately return requests for comment.

An Nvidia spokesperson said many of its customers have business entities in Singapore and use those entities for products destined for the U.S. and the west.

"We insist that our partners comply with all applicable laws, and if we receive any information to the contrary, act accordingly," Nvidia said.

DeepSeek has said it used Nvidia's H800 chips, which it could have legally purchased in 2023. Reuters could not determine whether DeepSeek has used other controlled chips that are not allowed to be shipped to China.

DeepSeek also apparently has Nvidia's less powerful H20s, which can still lawfully be shipped to China. The U.S. considered controlling them under the Biden administration and newly appointed Trump officials are discussing that as well.

The CEO of AI company Anthropic, Dario Amodei, said earlier this week, "it appears that a substantial fraction of DeepSeek's AI chip fleet consists of chips that haven't been banned (but should be), chips that were shipped before they were banned; and some that seem very likely to have been smuggled."

The U.S. has put in place a raft of restrictions barring exports of AI chips to China and plans to cap their shipments to a host of other countries.



(Reporting by Karen Freifeld; editing by Chris Sanders and Himani Sarkar)