DeepSeek Smuggles Banned Nvidia Blackwell Chips to Build Their New AI
- Chinese AI startup DeepSeek is reportedly using thousands of banned Nvidia Blackwell chips smuggled via third countries to train its next-generation model.
- The chips were allegedly sourced from data centers abroad, disassembled, and shipped to China to bypass strict US export controls designed to limit Beijing's AI progress.
- This incident highlights the limitations of US sanctions and China's continued reliance on American hardware despite Beijing's push for domestic tech self-sufficiency.
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| Photo by Solen Feyissa on Unsplash |
The technological cold war between the US and China has taken a new turn with reports that Chinese AI startup DeepSeek is secretly using thousands of banned Nvidia Blackwell chips to train its latest models. According to sources cited by The Information, these cutting edge processors were smuggled into China through a sophisticated network of third party countries. The chips were allegedly first installed in data centers in nations where their sale is legal, then disassembled and shipped piecemeal to the mainland to evade strict US export controls.
This revelation challenges the efficacy of Washington's blockade on advanced semiconductor technology. The Biden administration had imposed stringent restrictions to prevent Beijing from acquiring hardware capable of training frontier AI models. However, the smuggling operation described suggests that demand for Nvidia's top tier hardware is so high that Chinese firms are willing to go to extraordinary lengths to secure it. DeepSeek, which gained global fame earlier this year for building a high performance model at a fraction of the cost of its US rivals, now appears to be leveraging the same forbidden fruit to maintain its competitive edge.
The timing of this news is particularly sensitive. Just this week, President Donald Trump approved the sale of Nvidia's older H200 chips to China, signaling a potential thaw or at least a pragmatic shift in trade policy. However, the export ban on the more powerful Blackwell architecture remains firmly in place. By bypassing these sanctions, DeepSeek is not only breaking US law but also undermining the strategic intent of keeping China's AI capabilities a generation behind the West. The company's hedge fund backer, High Flyer, reportedly amassed a stockpile of 10,000 Nvidia GPUs before the initial bans took effect, giving it a head start that most domestic rivals lack.
US authorities are already cracking down on similar evasion tactics. In November, prosecutors charged individuals involved in a scheme to route chips to China via Malaysia using a fake real estate front. Despite these enforcement actions, the sheer volume of chips reportedly in DeepSeek's possession—thousands of Blackwell units—indicates that the leakage is systemic rather than isolated. Nvidia has stated it has seen no evidence of such smuggling, but the complex global supply chain makes total oversight nearly impossible.
This development also casts doubt on the narrative of Chinese self reliance. While Beijing has pushed for the use of domestic chips like Huawei's Ascend series, industry insiders admit that these alternatives still lag behind Nvidia's performance for training massive models. DeepSeek's reliance on smuggled American tech suggests that for the most ambitious projects, there is currently no substitute for Nvidia's silicon. If confirmed, this reliance exposes a critical vulnerability in China's drive for AI supremacy.
The broader implications for the AI race are profound. DeepSeek's ability to access Blackwell chips means it can compete directly with US labs on model quality and speed. This narrows the "compute gap" that American policymakers have tried so hard to maintain. As the US government considers its next move, the reality on the ground is that borders are porous, and in the high stakes world of artificial intelligence, technology finds a way to flow to where the money and ambition are greatest.
Ultimately, this story serves as a reality check for the global tech war. Sanctions can slow progress, but they cannot stop it entirely. As long as there is a demand for the world's fastest chips, a shadow market will exist to supply them. For DeepSeek, the risk of getting caught appears to be outweighed by the reward of building the next great AI model, regardless of whose rules they have to break to do it.