How Did DeepSeek Get Access To Nvidia Chips? US Investigates Possible Embargo Violation

China’s artificial intelligence startup DeepSeek has sparked regulatory scrutiny by the U.S. over possible violation of the U.S. artificial intelligence technology embargo against China.

The regulators are investigating DeepSeek’s possible access to advanced Nvidia Corp NVDA semiconductors via intermediaries in Singapore, Bloomberg reported Friday, citing unnamed sources familiar with the matter.

Howard Lutnick, President Donald Trump’s contender to lead the Commerce Department, hinted at the possibility of DeepSeek bypassing the U.S. embargo.

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Singapore accounts for about 20% of Nvidia’s revenue, Bloomberg cites regulatory filings. Reportedly, Nvidia shipments to Singapore were insignificant. The country had remained unscathed by the semiconductor embargoes so far.

U.S. tech stocks plunged on Monday as DeepSeek chatbot R1 triggered market jitters over the sustainability of the AI investment. Nvidia lost $600 billion in market value on Monday.

DeepSeek’s open-source AI model, developed for under $6 million, reportedly outperformed OpenAI’s U.S. models.

R1’s dexterity, cost, and efficiency prompted speculation that it employs Western technology. R1’s release led to a $1 trillion market wipeout.

Officials in the White House and Federal Bureau of Investigation are also scrutinizing whether DeepSeek exploited intermediaries in the Southeast Asian nation to procure the banned Nvidia chips.

Reportedly, DeepSeek trained its V3 model on Nvidia’s tailor-made H800 chips for China, which the U.S. banned in October 2023. This prompted Nvidia to design the H20 chips. The Trump administration is now weighing the restriction of the H20 chips.

At the same time, the U.S. has expanded its semiconductor technology restrictions on China, including the geographic scope of the trade rules.

In 2023, the Biden administration restricted access to advanced semiconductor technology for over 40 countries, including China’s allies. Earlier this year, Biden officials expanded the rules even further geographically.

Last year, Chinese firm Sophgo drew U.S. attention over the alleged use of a Taiwan Semiconductor Manufacturing Co TSM chip in Huawei Technologies Co’s AI processor. The companies denied the reports.

Meanwhile, Alibaba Group Holding BABA showcased a new version of its Qwen large language model, which reportedly outperformed DeepSeek, OpenAI’s GPT-4o, and Meta Platforms Inc META ‘s Llama-3.1 in key benchmarks.

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