US government alleged that China's DeepSeek AI firm utilized banned NVIDIA Blackwell chips in violation of advanced semiconductor export controls.

A senior Trump administration official claimed that U.S. officials believe Chinese AI startup DeepSeek trained its next AI model—which could launch by next week—on Nvidia Corp.'s most advanced AI chip, the Blackwell, potentially in violation of U.S. export controls. The official said the U.S. expects DeepSeek to strip out technical indicators that could reveal the use of American AI chips and believes the Blackwell chips are likely clustered at DeepSeek's data center in Inner Mongolia, according to Reuters reporting on Monday.

The alleged violation intensifies an already divisive debate in Washington over where to draw the line on China's access to top-tier U.S. AI chips. The Commerce Department's export controls currently bar Blackwell shipments to China. Trump previously signaled openness to Nvidia selling a scaled-down Blackwell in China in August, but later reversed course, arguing the most advanced chips should stay with U.S. companies.

Despite export uncertainty and these allegations, Nvidia continues to benefit from robust global AI demand. The company has disclosed a backlog exceeding $500 billion as hyperscalers invest heavily in AI infrastructure. JPMorgan analyst Harlan Sur said U.S. export approvals could unlock billions in additional revenue for Nvidia, making China a significant potential upside catalyst for the stock. Chinese customers continue to show strong appetite for AI compute, and any easing in export approvals could immediately convert that demand into revenue.

Nvidia shares were up 0.37% at $192.25 during premarket trading on Tuesday, according to Benzinga Pro data. Benzinga contacted Nvidia's investor relations team for comment and awaited a response at the time of publication.