China's DeepSeek Said To Use Banned Nvidia Chips To Train New AI Model

TaiwanPlus News

A report by the Information says Chinese AI startup DeepSeek obtained thousands of banned Nvidia Blackwell chips through an elaborate smuggling operation to train its latest model. Nvidia has disputed claims of "phantom datacenters" used to bypass US export controls and announced a new opt-in software tracking system to identify where its chips are operating. The controversy highlights the challenges US regulators and companies face in enforcing tech bans.

Transcript

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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