Chinese artificial intelligence startup DeepSeek is under scrutiny for allegedly circumventing US export restrictions by illegally acquiring thousands of Nvidia's Blackwell architecture GPUs. Nvidia acknowledged the situation but said it had no concrete evidence and would investigate all available leads.
Complex smuggling operation alleged
Reports from Bloomberg and Tom's Hardware, citing The Information, revealed that DeepSeek used a complex smuggling operation involving fake data centers and cross-border transport to obtain Nvidia's high-end GPUs, which were banned for export to China. Shell companies in Southeast Asia purchased Nvidia servers, assembled them into full data centers, and passed on-site audits by Nvidia OEM partners. After receiving approval, the servers were dismantled and smuggled piece by piece, with GPU units transported in suitcases across borders to DeepSeek in China. The smaller size of HGX B200 servers, equipped with eight GPUs, facilitated easier smuggling.
An Nvidia spokesperson stated that the company had not found credible proof of "ghost data center" smuggling and called such rumors "far-fetched." Nonetheless, Nvidia confirmed it would pursue all leads related to the allegations. DeepSeek did not respond to requests for comment.
DeepSeek's hardware challenges
DeepSeek gained attention earlier in 2025 for its R1 inference model, which leveraged Nvidia GPUs at a relatively low cost. Despite earlier reports suggesting Chinese AI companies were encouraged to transition to domestic hardware, DeepSeek reportedly struggled with Huawei's Ascend chips while training its R2 model and eventually reverted to Nvidia hardware.
Since 2023, the US has imposed strict export controls on Nvidia's advanced AI chips to China. However, US President Donald Trump recently announced approval for Nvidia to export its newer H200 GPUs to certain vetted Chinese customers, introducing some flexibility in the trade restrictions. The ongoing investigation into DeepSeek's alleged activities highlights persistent challenges in enforcing these export controls amid rising geopolitical tensions.
Article edited by Jerry Chen
