US looking into whether DeepSeek used restricted AI chips acquired through other countries, source says

The US Commerce Department is looking into whether DeepSeek – the Chinese company whose AI model’s performance rocked the tech world – has been using US chips that are not allowed to be shipped to China, a person familiar with the matter said.

China’s DeepSeek last week launched a free assistant it says uses less data at a fraction of the cost of US models. Within days, it became the most downloaded app in Apple’s App Store and stirred concerns about the United States’ lead in AI, sparking a rout that wiped around US$1 trillion off US technology stocks.

Current restrictions on Nvidia artificial intelligence processors are meant to stop its most sophisticated chips from reaching China.

Organised AI chip smuggling to China has been tracked out of countries including Malaysia, Singapore and the United Arab Emirates, the source said.

The Commerce Department and DeepSeek did not immediately return requests for comment.

An Nvidia spokesperson said many of its customers have business entities in Singapore and use those entities for products destined for the US and the West.

“We insist that our partners comply with all applicable laws, and if we receive any information to the contrary, act accordingly,” Nvidia said.