Published by Global Banking & Finance Review®
Posted on February 24, 2026
3 min readLast updated: February 24, 2026
A U.S. official says DeepSeek trained its next AI model on Nvidia’s Blackwell chips despite a China ban, risking export-control violations. The report intensifies Washington’s chip-policy fight as labs allege DeepSeek used 'distillation' from U.S. models.
By Steve Holland and Alexandra Alper
WASHINGTON, Feb 23 (Reuters) - 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 on Monday, in what could represent a violation of U.S. export controls.
The official said the U.S. believed DeepSeek would remove the technical indicators that might reveal its use of American AI chips. The official declined to say how the U.S. government obtained the information.
Nvidia declined to comment.
The Chinese embassy in Washington said in a statement that Beijing opposes “drawing ideological lines, overstretching the concept of national security, expansive use of export controls and politicizing economic, trade, and technological issues.”
The Commerce Department and DeepSeek did not immediately respond to requests for comment.
The official did not provide information on how DeepSeek obtained the Blackwells, but noted that U.S. policy is "we're not shipping Blackwells to China," emphasizing that DeepSeek's possession of the chips could represent an export control violation.
The news, not previously reported, could further divide Washington policymakers as they struggle to determine where to draw the line on Chinese access to the crown jewels of American AI semiconductor chips.
China hawks fear chips could easily be diverted from commercial uses to help supercharge China's military and threaten U.S. dominance in AI.
But White House AI Czar David Sacks and Nvidia CEO Jensen Huang argue that shipping advanced AI chips to China discourages Chinese competitors like Huawei from redoubling efforts to catch up with Nvidia's and AMD's technology.
U.S. export controls, overseen by the Commerce Department, currently bar Blackwell shipments to China.
In August, U.S. President Donald Trump opened the door to Nvidia selling a scaled-down version of the Blackwell in China. But he later reversed course, suggesting the firm's most advanced chips should be reserved for U.S. companies and kept out of China.
Trump's decision in December to allow Chinese firms to buy Nvidia's second most advanced chips, known as the H200, drew sharp criticism from China hawks, but shipments of the chips remain stalled over guardrails built into the approvals.
The official declined to comment on how the latest news would impact the Trump administration's decision on whether to allow DeepSeek to buy H200s.
The U.S. official also said DeepSeek's Blackwells are likely part of a cluster at its data center in Inner Mongolia, an autonomous region of China. The model they helped train likely relied on the "distillation" of models made by leading-edge U.S. AI companies, including Anthropic, Google, OpenAI, and xAI, echoing allegations made by OpenAI and Anthropic, the official added.
The technique known as distillation involves having an older, more established and powerful AI model evaluate the quality of the answers coming out of a newer model, effectively transferring the older model's learnings.
Hangzhou-based DeepSeek shook markets early last year with a set of AI models that rivaled some of the best offerings from the U.S., fueling concerns in Washington that China could catch up in the AI race despite restrictions.
(Reporting by Steve Holland and Alexandra Alper; Editing by Chris Sanders and Sonali Paul)
A senior U.S. official alleges that Chinese startup DeepSeek trained its next AI model on Nvidia’s Blackwell chips despite a U.S. export ban, raising possible export‑control violations. (investing.com)
Blackwell is Nvidia’s top AI chip and is restricted for China, so any use there could spur stricter U.S. controls and affect chip supply, sales outlooks, and China’s AI progress. (investing.com)
Distillation trains a new model on outputs from stronger systems. U.S. labs, including OpenAI and Anthropic, allege DeepSeek used their models’ outputs to boost its own systems. (ft.com)
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