DeepSeek unveiling its R1 model has completely shaken up the AI industry as the company claims its model is comparable to OpenAI's most advanced AI model, which took approximately $100 million to create. However, DeepSeek says it only spent $6 million to make R1.

The disparity between the development costs of OpenAI's o3 model and DeepSeeks R1 model put the industry in a tailspin, causing approximately $1 trillion to be wiped away from AI companies, particularly NVIDIA, the company providing the horsepower necessary to train these models. A part of the reason NVIDIA took such a stock hit was DeepSeek, saying it trained its R1 model using H800 GPUs, which were released in 2023.
The sentiment is - why pay for new and expensive NVIDIA hardware when the same or comparable results to what is considered the best AI model can be generated using hardware from 2023?
Well, the US government intends to find out if these claims are true as a new article from Bloomberg states the White House and the FBI have now officially launched a probe into DeepSeek to determine if the company used intermediaries to acquire high-end NVIDIA AI chips the US has banned explicitly from being sold to China.

Howard Lutnick, President Donald Trump's pick to lead the Commerce Department, insinuated DeepSeek circumvented US trade policies on Wednesday, saying, "NVIDIA's chips, which they bought tons of, and they found their ways around it, drive their DeepSeek model. It's got to end. If they are going to compete with us, let them compete, but stop using our tools to compete with us. So I'm going to be very strong on that."
Notably, DeepSeek stated in its research paper that it used 2,048 H800 chips to train its R1 model, which NVIDIA created for the Chinese market after the semiconductor limitations were imposed on China for NVIDIA's highest-end AI GPUs. Moreover, US officials then banned H800 chips from being sold in China, which caused NVIDIA to design a new, less powerful chip for that market. That chip was called the H20.
The trade policy debates haven't stopped there as the US government is concerned intermediaries will be used by China to get its hands on the most-advanced AI GPUs. As a result of this concern, the US government has banned the trade of these GPUs to now more than 40 countries that could serve as intermediaries for China, which includes some of Southeast Asia and the majority of the Middle East. But not Singapore.
Regulatory filings indicate Singapore accounts for approximately 20% of NVIDIA's revenue, but according to an NVIDIA spokesperson, the revenue associated with Singapore doesn't indicate diversion to China.
"Our public filings report 'bill to' not 'ship to' locations of our customers. Many of our customers have business entities in Singapore and use those entities for products destined for the US and the West," said the NVIDIA spokesperson
If you are interested in reading more about this story, check out the full article on Bloomberg here.