The launch of the open-source artificial intelligence (AI) model DeepSeek R1 last week caused the American technology company to lose $1 trillion due to a decline in stock value. DeepSeek R1, which was allegedly trained using lower cost and weaker hardware, successfully beat the model developed by OpenAI. The latest White House and Federal Criminal Bureau (FBI) are reported to be launching an investigation alleging that DeepSeek, based in Hangzhou, China, is illegally using NVIDIA chips.
DeepSeek is believed to have accessed more powerful NVIDIA chips through a third party based in Singapore. Singapore was a hub for 20% of NVIDIA's sales last year but with them later being resold to overseas customers. NVIDIA has said that their chips are sold to customers who comply with all existing laws and will act accordingly if it receives reports to the contrary.
The United States has imposed restrictions on the sale of AI chips for use in data centers in China. As a result, NVIDIA has produced special chips for the Chinese market with reduced processing power. The restrictions have been tightened further by Joe Biden with countries such as Malaysia, Singapore and Israel being given quotas to buy AI chips.