Nvidia decries 'far-fetched' reports of smuggling in face of DeepSeek training reports — unnamed sources claim Chinese company is involved in Blackwell smuggling ring

A new report claims that DeepSeek has illegally obtained and operated "several thousand" Nvidia Blackwell GPUs in the process of training and developing its newest large language model. According to coverage by The Information, six unnamed sources all claim DeepSeek's involvement in a convoluted smuggling ring based around the use of fake data centers as fronts to move high-powered servers into mainland China, illegally circumventing U.S. sanctions on newer AI GPUs.

Sources close to the matter allege that DeepSeek is involved in a high-complexity smuggling ring focused on getting Blackwell chips into China illegally through the use of fake data centers. Shell companies purchase data centers worth of Nvidia servers somewhere in Southeast Asia, setting up the data center and its hardware entirely to spec. Nvidia's OEM partners send contractors to inspect the installation, confirming successful installs and export compliance.

After this inspection is finished, smugglers reportedly disassemble the entire data center rack by rack, shipping the GPU servers in suitcases across the border into mainland China, where the purchase and use of certain Nvidia chips are restricted by the United States government. According to the report, sources with knowledge of these smuggling operations claim that smugglers and clients prefer 8-GPU rack servers like the HGX B200 over the powerful GB200 NVL72 for this smaller size and ease of covert transportation.

When asked for comment, an Nvidia spokesperson gave the following statement to Tom's Hardware:

We haven't seen any substantiation or received tips of 'phantom datacenters' constructed to deceive us and our OEM partners, then deconstructed, smuggled, and reconstructed somewhere else. While such smuggling seems far-fetched, we pursue any tip we receive.

DeepSeek's Need for Nvidia GPUs

DeepSeek, the most recognizable Chinese AI firm in the United States, thanks to its R1 LLM making worldwide headlines one year ago, has long been connected with Nvidia GPUs. Its sensational R1 model was trained on only 2,048 Nvidia H800s in two months, a number of GPUs far smaller and more efficient than any Western competitor. Since this time, DeepSeek has consistently been linked to the stockpiling and purchase of as many Nvidia GPUs as it can obtain, with reports constantly swirling about DeepSeek somehow bypassing export restrictions and securing huge numbers of the newest Nvidia chips.

Interestingly, DeepSeek's latest internal reports seem to indicate plans to use Nvidia chips for its newest AI models. In a whitepaper released on December 2nd on DeepSeek V3.2, DeepSeek suggests their bottleneck on performance matches that of frontier models like Gemini-3.0-Pro is pre-training compute; "We plan to address this knowledge gap in future iterations by scaling up the pre-training compute." Pre-training compute is a workflow that Nvidia GPUs and CUDA software perform better than most other competitors, suggesting that DeepSeek engineers count on something changing for its access to high-caliber pre-training compute power.

DeepSeek's track record proves that Nvidia's pre-training abilities fill a niche unmatched by domestic Chinese products. Reports in August claimed that Huawei's Ascend GPU servers were unable to run necessary training workloads, prompting a return to Nvidia hardware in the R2 training process. This was despite government intervention and doctrines calling for DeepSeek to turn to domestic Chinese products for its AI workload. While the Huawei Ascend servers were used for inference for the models, the company could not turn anywhere but to Nvidia, much to the chagrin of China.

Nvidia's Future in China

The Trump administration recently announced plans to unrestrict the Nvidia H200 GPU in China, opening up Nvidia's sales in the country. Speculators claim that this policy U-turn from the White House, which has spent much of 2025 toeing a line of complete export isolationism to China, comes as fears of Huawei's CloudMatrix 384 and Ascend 910C systems grow. Reputable claims hold that these servers match the H200 and GB200 NVL72 in certain performance metrics, causing the U.S. government to release the H200 into China.

This new policy is based on a compromise between flooding China with easy-to-access American Nvidia tech and banning it altogether. The hope is to satiate Chinese tech needs and take away motivation for firms like Huawei to develop their own Nvidia competitors. The adoption of this doctrine, oft-touted by Nvidia's lobbying efforts to the White House, marks a major shift in the "Chip War" trade offensive between Beijing and Washington D.C., which has moved from preventing China from any access to next-gen tech to hoping to slow China's tech power that is beginning to threaten Western tech dominance.

While Trump's Commerce Department continues to insist that China will never see Nvidia Blackwell hardware, keeping the export exceptions limited to Hopper-generation hardware like the H200, time will tell if further Nvidia lobbying and fears of the Chinese tech sector will open the doors further. And of course, if DeepSeek truly is involved in conspiracies of phantom data centers, they won't even need the U.S. to allow them access to Blackwell.

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