DeepSeek's AI Chip Push 'Inevitable' Amid Global Race, Expert Says

Chinese AI startup DeepSeek is developing its own AI chips, according to three people familiar with the matter, a push that could reduce its reliance on Nvidia and Huawei chips, which it has depended on to train and run its globally popular models.

If successful, DeepSeek's expansion into semiconductor development would mark a major strategic shift for a company widely hailed in China as the country's AI champion.

Details

DeepSeek aims to design custom chips to meet its specific needs, potentially gaining more flexibility and control over its supply chain. The sources did not disclose the timeline or investment size for the project.

Context

The news comes amid escalating US-China tech tensions, with Washington imposing export controls on advanced AI chips to Beijing. Analyst Bennett noted it's "basic economics" that a company like Nvidia with "outsized" returns would attract increased competition. She also highlighted that China has "repeatedly said they want to reduce dependency on the U.S. as it relates to AI, and so they are significantly spending money, investing money, around a lot of the Chinese-based companies."

Shares of Nvidia slipped in morning trading before paring those losses.

What This Means for Investors

DeepSeek's chip development poses a potential challenge to Nvidia's dominance in the AI chip market, particularly in China. However, it also reflects a broader trend toward self-sufficiency in this critical sector. Investors should monitor regulatory and investment developments in this space.