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The U.S. has launched an investigation to determine if DeepSeek obtained NVIDIA’s AI chips through intermediaries in Asia, aiming to identify potential trade loopholes.
DeepSeek’s remarkable advancements in AI technology have prompted the U.S. government to strengthen export restrictions, now possibly looking into trade loopholes. The DeepSeek situation has motivated American authorities to take extra measures to prevent their advanced technology from ending up in the hands of adversarial countries, like China. Despite stringent rounds of export controls, countries such as China still manage to access NVIDIA’s high-performance AI chips, notably the H100s. According to Bloomberg, U.S. officials are investigating whether these chips reached Chinese firms via third-party countries like Singapore, which could have serious consequences if such a loophole is confirmed.
So, what’s the deal with Singapore specifically? Data from @KobeissiLetter highlights that NVIDIA’s sales to Singapore skyrocketed by up to 740% from the time DeepSeek was established. Singapore isn’t exactly a major player in the AI arena, which substantially raises suspicions about a potential loophole. Intriguingly, NVIDIA has noted that the billing locations might differ from the end-user locations, hinting at a known workaround to bypass U.S. restrictions.
The situation continues to unfold as China reportedly imports chips from Singapore in volumes surpassing even the U.S. Given that Singapore reportedly has only 99 data centers, this disparity is concerning. For context, DeepSeek boasts compute resources valued over $1.6 billion and possesses around 10,000 of NVIDIA’s “China-specific” H800 AI GPUs alongside 10,000 high-end H100 AI chips. Clearly, China isn’t lacking in cutting-edge AI technology, rendering U.S. preventive measures somewhat ineffective thus far.
Moreover, Singapore isn’t the only country under scrutiny; the Philippines is also accused of supplying chips to China. With the U.S. gearing up for a formal investigation, NVIDIA’s significant AI revenue, about 20%, is now at risk. Should the U.S. decide to seal off this trade loophole, it might lead to drastic repercussions, not just for NVIDIA, but also for the broader AI markets as they stand today.
