A Chinese artificial intelligence startup circumvented American semiconductor restrictions to train its next-generation model on banned Nvidia hardware, according to US officials.
DeepSeek reportedly used Blackwell chips, Nvidia's most advanced AI processors prohibited from export to China, at its Inner Mongolia data center facility. The upcoming model could launch as early as next week, placing the revelation just days before Nvidia's quarterly earnings report scheduled for February 25.
Trump administration officials confirmed the violation this week, suggesting Beijing might erase technical signatures that would expose the hardware's American origin.
"Exporting any AI chips to China creates unacceptable risks," said Chris McGuire, former White House National Security Council official under President Joe Biden.
He noted that reliance on smuggled Blackwell units demonstrates China's continued dependence on foreign semiconductor technology despite domestic production efforts.
US Commerce Department representatives expressed particular concern about potential military applications. One official stated that Chinese companies openly flouting export controls cannot be trusted to avoid supporting Beijing's armed forces with restricted technology.
Chinese foreign ministry spokesperson Mao Ning responded during a Tuesday briefing that she lacked specific information about the case. She repeated Beijing's position that Washington weaponizes trade through excessive national security claims and politicized technology restrictions.
DeepSeek first attracted international attention last year when its models matched performance from leading US developers including OpenAI and Anthropic.
The Hangzhou-based company's apparent access to prohibited hardware highlights persistent enforcement challenges surrounding advanced semiconductor exports.
Nvidia faces increased scrutiny ahead of its fourth-quarter financial results following last quarter's performance where revenue exceeded projections by approximately $3 billion with sequential growth reaching $10 billion. Despite those figures, share prices declined from $186.52 on earnings day to $180.64 during subsequent trading.
President Donald Trump authorized limited Blackwell sales to Chinese buyers in August 2025 through scaled-down versions of the chip architecture. Complete Blackwell exports remain banned under current regulations despite this policy adjustment.
