00:00Chinese AI startup DeepSeq is facing fresh scrutiny.
00:05A new report says it used thousands of NVIDIA's most advanced Blackwell chips,
00:09which the U.S. has banned from export to China, to train its next big AI model.
00:14The allegation lands just as Washington loosens controls on older NVIDIA chips.
00:19Our reporter Chris Gorin has been following the story and comes to us now with the details.
00:25So Chris, what exactly is being alleged here?
00:30Well, according to an exclusive report in The Information,
00:34Chinese AI company DeepSeq was able to obtain thousands of NVIDIA Blackwell GPUs
00:40through an elaborate smuggling operation.
00:43Now, keep in mind the Blackwells are NVIDIA's most advanced chips
00:47and are considered to be probably the most powerful chip for training AI models in the world.
00:53And that's why the U.S. has actually banned their sale in countries like China,
00:58which are considered foreign adversaries.
01:00Now, the scheme reportedly goes like this.
01:03The chips are sold and assembled in data centers in countries where it's still legal to buy them.
01:08Then, you know, these are big server cabinets, maybe two meters high.
01:12Then they're disassembled after they've been cleared, smuggled into China, and reassembled.
01:17And then in this case, companies like DeepSeq use them to train new AI models.
01:22Now, keep in mind that this is the exact kind of outcome that U.S. export controls are designed to prevent.
01:29Now, that being said, NVIDIA has disputed the reporting.
01:33In a statement to Taiwan Plus, an NVIDIA spokesperson said that they haven't seen any substantiation
01:39or received tips of phantom data centers constructed to deceive them or their manufacturing partners,
01:45and that while such smuggling seems far-fetched, they pursue any tip they receive.
01:50So there's conflicting accounts here, and DeepSeq itself has not responded yet to the story.
01:57Chris, this news also comes just as NVIDIA announces a new global tracking system for its chips.
02:03Can you tell us more about that?
02:08Yes, just hours ago, NVIDIA officially announced a new software-based tool that could, among other things,
02:15indicate which countries its chips are operating in.
02:18So in theory, that could help find this smuggled hardware, but there are many caveats here.
02:24First of all, it's a software-based tool that's opt-in, so customers could simply choose not to use it.
02:30Furthermore, NVIDIA explicitly stated that their chips do not have hardware tracking technology, kill switches, or backdoors.
02:37So you can see the delicate line NVIDIA is walking here, because that language about backdoors and such,
02:43that's specifically addressing concerns from Beijing, which is when they tell their companies why they shouldn't use U.S. chips,
02:50these are the concerns that they always bring up, kill switches, etc.
02:53So NVIDIA has to convince China, where it's trying to enter the market, that these chips are safe to use,
03:00and it has to convince U.S. regulators, including U.S. President Donald Trump,
03:04that China won't leap ahead of American AI by using these chips, and that it can stop the smuggling.
03:10So with billions of U.S. dollars in China sales on the line,
03:14this is something NVIDIA really needs to get right.
03:16Thanks, Chris.
03:19That was Chris Gordon reporting from our Taipei newsroom.
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