China's DeepSeek moves to develop its own AI chip, cutting reliance on Nvidia

Chinese AI startup DeepSeek is pushing to develop its own AI chips in a bid to reduce its dependence on Nvidia and Huawei, sources said, as prolonged US export controls on semiconductors accelerate a broader race among Chinese AI companies toward chip self-sufficiency.

Citing multiple sources, Reuters reported Tuesday that DeepSeek has been pursuing in-house AI chip development for about a year and has held discussions with chip design firms, foundries and memory chip companies.

The sources said DeepSeek has also stepped up hiring of chip design engineers in recent months, recruiting key technical talent through industry connections and informal channels rather than public job postings.

Reuters described the move as DeepSeek joining a broader trend among global AI companies to develop proprietary chips, tighten control over their hardware and reduce reliance on Nvidia.

OpenAI last month unveiled "Jalapeño," its first custom AI inference chip co-developed with Broadcom, while Anthropic is also reportedly considering developing its own AI chip.

DeepSeek is among the companies most directly affected by US export controls on advanced semiconductors targeting China.

As US regulations have made it increasingly difficult for Chinese firms to obtain Nvidia's latest AI chips, they have expanded their use of domestically produced semiconductors and accelerated in-house chip development with backing from the Chinese government.

DeepSeek has so far relied on a combination of Nvidia's lower-spec chips cleared for export to China and Huawei's AI chips. The company disclosed that its R1 reasoning AI model — which drew global attention last year — was developed using Nvidia's H800, a lower-spec chip. Since then, DeepSeek has reportedly been increasing its use of Huawei chips.

However, analysts say a successful DeepSeek chip could also pose a challenge to Huawei.

Reuters noted that US export controls have allowed Huawei to capture roughly half of China's AI chip market, estimated at around $50 billion, making it the biggest beneficiary of the restrictions. But its dominance has been eroding as major Chinese tech companies including Alibaba and Baidu expand their own chip development efforts — a trend that could intensify further if DeepSeek enters the market, potentially squeezing Huawei's position even more.

sjy@heraldcorp.com