Bloomberg reports that the U.S. government is investigating whether DeepSeek acquired Nvidia's restricted GPUs for AI workloads through intermediaries in Singapore, bypassing U.S. export restrictions. Concerns have grown as DeepSeek's AI model R1 shows capabilities on par with leading OpenAI and Google models. Adding to the concerns, Singapore's share of Nvidia's revenue increased from 9% to 22% in two years.
DeepSeek has not disclosed the specific hardware used to train its R1 model. However, it previously indicated that it used a limited number of H800 GPUs — 2,048 — to train its V3 model with 671 billion parameters in just two months, or 2.8 million GPU hours. By contrast, it took Meta 11 times more compute resources (30.8 million GPU hours) to train its Llama 3 model with 405 billion parameters using a supercomputer featuring 16,384 H100 GPUs over 54 days. Observers believe that R1 also consumes fewer resources than competing models. However, R1 was likely trained on a more powerful cluster than the one used for V3.
This assumption has led to speculation that the company relied on restricted Nvidia GPUs that cannot be freely imported to China. Authorities, including the White House and the FBI, are investigating whether DeepSeek obtained restricted AI GPUs through third-party firms in Singapore. So far, officials have not publicly confirmed whether laws were broken, but Nvidia maintains that it follows all legal requirements.
The U.S. has tightened restrictions on advanced GPU exports to China for several years. In 2023, the Biden administration imposed new rules limiting the performance of GPUs that can be sold to China and multiple other nations without an export license from the U.S. Department of Commerce. However, Singapore was not among the restricted countries, so many believe it was a loophole for Chinese entities to get their hands on Nvidia's high-end H100 GPUs. According to the report, representatives John Moolenaar and Raja Krishnamoorthi have called for strict licensing measures unless Singapore strengthens oversight on shipments.
Singapore plays a vital role in Nvidia's global business, accounting for 22% of its revenue as of Q3 FY2025, up from 9% in Q3 FY2023 when the first significant restrictions on AI GPU sales to Chinese were introduced, as @tphuang noticed. However, the company clarifies that most transactions with Singapore involve shipments sent elsewhere, not China. Nvidia reports sales based on 'bill to' locations, which do not always reflect where the products are ultimately used.
"The revenue associated with Singapore does not indicate diversion to China," a statement by Nvidia reads. "Our public filings report 'bill to' not 'ship to' locations of our customers. Many of our customers have business entities in Singapore and use those entities for products destined for the U.S. and the West. We insist that our partners comply with all applicable laws, and if we receive any information to the contrary, act accordingly."
Howard Lutnick, nominated by Donald Trump to lead the Commerce Department, claimed during his confirmation hearing that DeepSeek managed to evade U.S. trade restrictions. He argued that China should compete fairly without using American hardware and vowed to take a hard stance on enforcing chip sales limits if confirmed.
