The US is Investigating If China Smuggled Chips from Malaysia to Develop ‘Disruptive’ DeepSeek AI

The artificial industry (AI) tech industry, especially in the United States (US), went into crisis mode recently following the launch of a new open-source AI model by Chinese company DeepSeek that took the world by storm.

Last week, DeepSeek launched a free AI assistant touted to use less data, processing prowess and energy while being at a fraction of the cost of AI models by US companies. It then became the most downloaded app in the Apple App Store, sparking a rout that wiped around a whopping USD1 TRILLION off US technology stocks.

The US Commerce Department is investigating whether DeepSeek smuggled AI chips from Malaysia and other countries to China

For illustration purposes

Following this, the US Commerce Department is now investigating whether DeepSeek has been using AI chips that are not allowed to be shipped to China, with the restrictions previously put in place by the US so that the country can win the so-called “AI race” against China.

According to Reuters, which sourced a person familiar with the matter, an organised AI chip smuggling ring has been tracked out of several countries, including Malaysia, Singapore and the United Arab Emirates.

For context, current restrictions on Nvidia artificial intelligence processors are meant to stop its most sophisticated chips from reaching China, though the US Commerce Department think maybe Chinese companies such as DeepSeek did somehow get their hands on them.

DeepSeek said it developed the AI model using previous-generation AI chips that are less powerful

For illustration purposes

However, DeepSeek has clarified that it used the previous generation H800 chips by Nvidia, which it could legally purchase in 2023. The report added that DeepSeek also has the less powerful H20s chips, which can still lawfully be shipped to China.

Meanwhile, Nvidia stressed that its partners comply with all applicable laws and that they haven’t received any information about their AI chips being smuggled into China.

For illustration purposes

So, what do you guys think of the whole situation? Share your thoughts with us in the comments!

Also read: Donald Trump Officially Renames Gulf of Mexico to “Gulf of America”