DeepSeek's Breakthrough: A Boost for Nvidia in Chinese AI Market

Nvidia emphasized the demand for its chips in China following DeepSeek's AI advancements, despite reduced necessity compared to rivals. Also highlighting their compliance with U.S. export laws, Nvidia remains integral to China's AI sector. The company addresses growing computational needs despite export restrictions.

Nvidia announced on Monday that the recent advancements made by Chinese AI firm DeepSeek highlight the critical role of its chips within the Chinese market. The statement followed a sharp 17% drop in Nvidia shares amid investor concerns, as DeepSeek reportedly matched rival capabilities, notably those of OpenAI, using significantly fewer Nvidia chips than U.S. counterparts.

Nvidia clarified that DeepSeek's progress demonstrates the potential of new models using widely available, export-compliant technology. Research from DeepSeek utilized around 2,000 Nvidia H800 chips, reflecting technology designed in alignment with U.S. export controls initiated in 2022. Experts believe these controls insufficiently hinder China's AI advancements, as legal acquisitions enabled DeepSeek to enhance computational efficiency.

Despite export limitations, Nvidia's chips remain vital for AI services, particularly in 'inference,' according to Nvidia. The company has developed the H20 chip to conform to the latest export regulations. However, questions arise about the future of such valuable chips' availability to China amid ongoing export control complexities.

(With inputs from agencies.)