US Officials Confirm DeepSeek Trained Latest AI Model on Banned Nvidia Blackwell Chips at Inner Mongolia Data Center Despite Export Controls

Chinese AI startup DeepSeek's latest AI model, set to be released as soon as next week, was trained on Nvidia's most advanced AI chip, the Blackwell, a senior Trump administration official said Monday, in what could represent a violation of US export controls designed to limit China's access to cutting-edge semiconductor technology.

The US believes DeepSeek will remove technical indicators that might reveal its use of American AI chips, the official said, adding that the Blackwell processors are likely clustered at the company's data center in Inner Mongolia, an autonomous region of China. The official declined to say how the US government received the information or how DeepSeek obtained the chips, but emphasized that US policy is clear: "we're not shipping Blackwells to China."

US export regulations currently ban shipments of Nvidia's Blackwell chips to China under Commerce Department restrictions designed to prevent advanced AI capabilities from supporting Chinese military applications and preserving American technological advantages. The Blackwell series represents Nvidia's most powerful AI accelerator lineup, significantly outperforming the H200 chips that sit one tier below in performance.

The revelation comes amid intense Washington debate over where to draw the line on Chinese access to top-tier US AI semiconductors. President Trump briefly opened the door in August for Nvidia to sell a scaled-down Blackwell variant to China, then reversed course, insisting the company's top-tier hardware should remain in American hands. His December decision to allow Chinese firms to purchase H200 chips drew sharp criticism from China hawks but those approved shipments remain stuck behind regulatory approval processes.

While the administration official would not specify how DeepSeek acquired Blackwell chips, previous reporting from The Information indicated that DeepSeek had smuggled chips into China to train its next model. Reuters is reporting for the first time on the US government's confirmation of the chips' use at DeepSeek's Inner Mongolia facility.

Experts note that advanced semiconductors can reach China through gray market channels including third-party intermediaries, offshore entities, cloud infrastructure pathways, or front companies that obscure final destinations. Even when direct sales are restricted, high-end GPUs can surface through networks that complicate compliance monitoring and enforcement.

DeepSeek likely also removed or altered technical signatures embedded in the chips that would identify them as Nvidia products subject to export restrictions, according to the official, making detection and enforcement even more challenging.

The model trained on the alleged Blackwell hardware likely also relied on "distillation" of models made by leading US AI companies including Anthropic, Google, OpenAI, and xAI, the official added, echoing allegations made by OpenAI and Anthropic in recent weeks.

Distillation involves having an older, more established and powerful AI model evaluate the quality of answers coming out of a newer model, effectively transferring the older model's learnings. Anthropic accused DeepSeek on Monday of generating over 150,000 exchanges with its Claude chatbot as part of coordinated campaigns to extract capabilities.

The combination of alleged chip smuggling and model distillation suggests DeepSeek is pursuing multiple pathways to close the technology gap with American AI leaders despite export restrictions.

Confirmation of DeepSeek obtaining Blackwell chips is likely to deepen divisions among Washington policymakers struggling to determine effective China AI policy. The news arrives at a particularly sensitive moment as the administration weighs whether to approve DeepSeek's purchase of H200 chips—a decision that now faces additional scrutiny.

China hawks argue that any AI chip exports to China are dangerous given that Chinese AI leaders "brazenly violate export controls and are unlikely to comply with terms prohibiting use for the Chinese military," according to former White House National Security Council technology director Saif Khan. He added that "Chinese AI companies' reliance on smuggled Blackwells underscores their massive shortfall of domestically produced AI chips and why approvals of H200 chips would represent a lifeline."

Conversely, White House AI Czar David Sacks and Nvidia CEO Jensen Huang have argued that selling advanced chips to China could actually slow down domestic competitors like Huawei by reducing pressure to develop indigenous alternatives. Their logic: deny China access to Nvidia and AMD hardware, and you only motivate Chinese firms to accelerate self-sufficiency efforts.

Hangzhou-based DeepSeek shook markets in early 2025 with AI models that rivaled some of the best American offerings despite operating under export restrictions, fueling Washington concerns that China could catch up in the AI race faster than anticipated.

The company's R1 reasoning model, released in January 2025, appeared to match leading American systems at dramatically lower reported training costs, though questions remain about whether those figures accurately reflected total development expenses or just incremental costs.

Nvidia, the Commerce Department, and DeepSeek did not respond to requests for comment. The Chinese embassy in Washington criticized what it described as "drawing ideological lines, overstretching the concept of national security, expansive use of export controls and politicizing economic, trade, and technological issues."