Greetings,

This week we published a piece on the lengths one of China's most important AI startups, DeepSeek, is going to in order to secure the most advanced chips in the world. It confirms what we already knew about the difficulties the U.S. faces in enforcing export controls in the intricate, globalized semiconductor industry.

DeepSeek has been developing its next major model using several thousand of Nvidia's state-of-the-art Blackwell chips, which the U.S. has forbidden from being exported to China, according to six people with knowledge of the matter. The chips are arriving via a convoluted scheme that involves smuggling—a stark reminder that access to advanced hardware remains the key factor in the global AI race.

Why it caught my eye:

• Banned Blackwell Chips: DeepSeek is using thousands of Nvidia's advanced Blackwell chips, obtained through a complex smuggling operation.
• Global Bypasses: The scheme involves dismantling and reassembling servers in data centers outside China to bypass U.S. export controls and hide the end user.
• Competitive Edge: Access to these chips is crucial for DeepSeek to remain globally competitive, as local Chinese chips are not yet suitable for large-model training.

This article is essential reading to understand how DeepSeek's success, despite being scrutinized by Washington, has made it a symbol of Chinese tech innovation and resilience.

Best,

Jessica Lessin
Founder & Editor-in-Chief

DeepSeek is Using Banned Nvidia Chips in Race to Build Next Model

DeepSeek, the Chinese AI startup, has been developing its next major model using several thousand Nvidia's state-of-the-art Blackwell chips which the U.S. has forbidden from being exported to China, according to six people with knowledge of the matter.

The chips DeepSeek is using were smuggled into China, the people said, through a convoluted scheme that involves sending them to data centers in countries that are allowed to buy them, and then dismantling the servers containing the chips and importing the equipment in pieces to China.