The fight for AI supremacy gets nastier. The Blackwell chips were allegedly used in servers at a data center in the northern Chinese region of Inner Mongolia. The servers were allegedly configured to remove signs of U.S. origin from the chips. In other words, Washington is accusing Beijing of laundering U.S. chips to get around the export ban.
The U.S. Department of Commerce, China’s embassy in Washington, and Nvidia did not immediately respond to a request for comment. At the center of the controversy is a Chinese AI startup called DeepSeek that will unveil its latest AI model soon. Last year, DeepSeek’s open-weight AI models surprised many in the AI community by outperforming many established frameworks.
But success was not without controversy. In South Korea, DeepSeek was investigated over the collection of personal data. In Europe, there are allegations of bias in the AI model. But the spat over the Blackwell AI chip is a much bigger deal. It is the most advanced chip yet from Nvidia, which has all but cornered the market for AI chips.
Washington blocked its export to China to slow Beijing’s AI ambitions. So if Beijing did sidestep the ban, it would be a blow to U.S. efforts to contain Chinese AI. Washington has reason to believe that Beijing will do just that. People are actively evading the export controls, according to some U.S. officials. You see it in the quantity of chips they purchased. DeepSeek’s AI prowess is for real.
For years, Nvidia has been trying to get the U.S. Department of Commerce to allow exports of its chips. It argues that carefully calibrated exports can serve U.S. interests. But the Blackwell AI chip, the latest chip, remains restricted. It is a much faster chip than previous generations. Washington accuses Beijing of pulling out all the stops to get the Blackwell AI chip.
It claims that Beijing is actively stripping the label of U.S. origin off the chip. If the report is accurate, it has profound implications for the global AI fight. It will be hard to put the genie back in the bottle. Washington can try and tighten export controls but that will not be easy. There are so many players involved in the global supply chain. Chip production supply chain is very complex.
So many third-party and fourth-party vendors are involved. It is easy for Chinese companies to access the technology. Washington can also try and prevent Nvidia from working with Beijing. But Nvidia will not want to give up the lucrative Chinese market. Nvidia wants to sell as many AI chips as possible. For now, it is a game of cat and mouse.
Beijing and Nvidia are likely to deny the report. Washington will try and prove that Beijing is breaking the rules. The spat is just the beginning of a new era in the AI fight. It will be a fight to control the flow of AI chips.