(C) ZAWYA

BEIJING/SANTA CLARA — A report has stirred the global tech industry, alleging that Chinese artificial intelligence (AI) startup DeepSeek has engaged in an elaborate smuggling operation to acquire thousands of NVIDIA's top-tier, export-restricted Blackwell chips to develop its next-generation AI model. The claims have been vehemently denied by NVIDIA, igniting a new debate over the effectiveness and enforcement of U.S. technology export controls aimed at curbing China's advancements in critical AI hardware.

 
Allegations of an Elaborate Smuggling Scheme

According to The Information, citing multiple sources, DeepSeek has secured thousands of NVIDIA Blackwell GPUs over the past two years, utilizing a circuitous route through third-party countries where the sale of the advanced chips is still permitted.

The alleged scheme involves setting up non-Chinese data centers, reportedly in Southeast Asia, where the chips and servers are initially installed. This stage includes mandatory inspections by equipment developers like NVIDIA, Dell, and Supermicro to ensure compliance with export regulations. However, once the inspection is complete, DeepSeek is accused of dismantling the servers, shipping the components back to China through misdeclaration to customs, and reassembling them in Chinese data centers.

This alleged operation is a direct response to the stringent U.S. export bans. While U.S. President Donald Trump recently authorized the export of the previous-generation Hopper architecture's H200 chip to approved customers in China (with a reported 25% revenue fee to the U.S. government), the newer, more powerful Blackwell and the upcoming Rubin chips remain strictly prohibited.

 
NVIDIA Denies 'Phantom Data Center' Claims

NVIDIA has strongly pushed back against the allegations. A company spokesperson stated, "We haven't seen any substantiation or received tips of 'phantom data centers' constructed to deceive us and our OEM partners, then deconstructed, smuggled, and reconstructed somewhere else." While calling the alleged smuggling "farfetched," the spokesperson confirmed that the company investigates all tips it receives.

In a move to strengthen enforcement, NVIDIA has reportedly developed a new, optional location-verification software that will ship with its Blackwell chips. If activated by customers, this tool will help track the physical location and operational status of its GPUs, making large-scale smuggling operations significantly harder to execute.

 
DeepSeek’s Technical Edge: Sparse Attention

The controversy comes as DeepSeek prepares to launch its new model, which is rumored to incorporate Sparse Attention technology. This technique, also dubbed DeepSeek Sparse Attention (DSA) in the company's experimental models like DeepSeek-V3.2-Exp, significantly reduces the computational cost of AI model inference by only utilizing a fraction of the model for a given question. Sources indicate that while this technology promises substantial efficiency gains, scaling it for large models remains a challenge. DeepSeek employees are reportedly aiming for a launch before the Lunar New Year holiday in February, though founder Liang Wenfeng is said to be prioritizing performance over strict deadlines.

DeepSeek has yet to issue a public statement regarding the smuggling allegations. The incident underscores the escalating geopolitical tensions in the global AI race and the lengths to which Chinese tech firms may go to secure the essential hardware required to compete with their U.S. rivals.

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