Bypassing bans: How Nvidia Blackwell chips got to China bypassing US export controls
10 December 20:45
DeepSeek, a Chinese artificial intelligence startup that has quickly become a competitor to world leaders, uses American Nvidia chips that are banned from export to China.
According to Bloomberg, Blackwell chips were smuggled into China, which underscores the difficulties of the United States in enforcing technology sanctions, "Komersant Ukrainian" reports.
Circumvention scheme and the role of Blackwell
The ban on the export of powerful Nvidia graphics processing units (GPUs) to China is a key US tool to curb the development of Chinese AI technologies.
However, DeepSeek, which is working on its future AI model, managed to obtain the banned hardware:
- Smuggling: According to The Information, Nvidia’s Blackwell chips, the most powerful version of the GPU, were smuggled into China through third countries where their sale was authorized.
- Disguise: To avoid detection during transportation, the servers containing the chips were dismantled before arriving in China.
- The ban remains in place: The ban on exports of the high-powered version of Blackwell remains in effect, although US President Donald Trump recently granted Nvidia permission to ship an older version of its chips (H200) to China.
DeepSeek and the Funding Context
DeepSeek gained global attention in January when it unveiled its own AI model that performed competitively with Silicon Valley models but was built at a much lower cost.
- Funding: The startup is funded by Chinese hedge fund High-Flyer.
- Old stocks: High-Flyer has accumulated significant inventory by purchasing 10,000 Nvidia GPUs back in 2021, before the US imposed export restrictions.
Prioritizing domestic production
The situation with chip smuggling comes amid active efforts by the Chinese authorities to stimulate domestic chip production.
- Government requirement: The Chinese authorities require companies building new data centers and receiving government funding to abandon foreign products and use only domestic artificial intelligence chips.
- Local cooperation: In September, DeepSeek said it was collaborating with Chinese chipmakers on its new AI model.
The unofficial purchase of banned Nvidia chips is a sign that, despite internal requirements and sanctions, Chinese AI developers still consider Western technology critical to achieving leadership in artificial intelligence.
