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China's DeepSeek trained AI model on Nvidia's best chip despite US ban: Report

DeepSeek trained its AI model using Nvidia’s top Blackwell chips despite export bans, possibly masking chip use and employing distillation from major US AI systems, officials said.

  • A senior U.S. government official told Reuters that DeepSeek trained its latest model using Nvidia's Blackwell chips believed installed at an Inner Mongolia data centre, despite export restrictions.
  • Facing a shortage of domestic high-end chips, DeepSeek, Hangzhou-based AI startup, used distillation with outputs from OpenAI and Google to boost its latest model's performance.
  • U.S. investigators say restricted Blackwell units flow through a sophisticated gray market with recurring deals, while the U.S. Department of Justice shut down a China-linked smuggling network moving tens of millions in GPUs and Singaporean authorities probed server exports to Malaysia.
  • Confirmation that DeepSeek obtained Blackwell chips could deepen debate among U.S. lawmakers, while China's embassy in Washington criticised trade politicisation; Nvidia declined to comment and a senior U.S. official stressed `We do not supply Blackwell to China`.
  • The disclosure intensifies tensions in the global AI race, as Washington balances commercial interests with national security amid the 80% unused capacity estimate in Chinese data centers, while experts warn of military-use risks.
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According to the US government, the Nvidia chips are bundled in a data center in Inner Mongolia

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Market Screener broke the news in on Tuesday, February 24, 2026.
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