DeepSeek's AI breakthrough makes US rethink NVIDIA H20 chip exports
What's the story
The Donald Trump administration is considering tougher restrictions on NVIDIA's H20 chip sales to China.
The consideration stems from the emergence of DeepSeek AI and fears over China's rapid advancement in artificial intelligence (AI) technology, according to Reuters.
The talks of these restrictions started during Joe Biden's presidency and are still in the early stages under Trump's administration.
Chip compliance
NVIDIA's H20 chips and US restrictions
NVIDIA's H20 chips, which are specifically designed for the Chinese market, can power AI software.
The chips were developed in accordance with existing US restrictions on shipments to China, imposed by former President Joe Biden.
The ongoing discussions are aimed at further tightening these restrictions.
However, neither White House representatives nor NVIDIA have offered any official comments on this matter yet, Reuters reports.
Market impact
NVIDIA's market performance and future plans
NVIDIA felt the market's brunt with a single-day loss of 17% on January 27, which tanked its value by $593 billion overnight, marking a record one-day loss for a Wall Street stock.
The decline was largely due to the emergence of DeepSeek—a Chinese AI start-up providing low-cost alternatives for tasks.
Despite the challenges, NVIDIA has said it is ready "to work with the administration as it pursues its own approach to AI."
AI competition
DeepSeek AI's advancements and market implications
DeepSeek AI's R1 language model, which mimics elements of human reasoning, has performed remarkably well. It has matched and even outperformed OpenAI's latest o1 model on a number of benchmarks.
These developments could potentially eat into the market share of leading AI companies including OpenAI, Microsoft, Google, and Meta.
Not to mention, DeepSeek's competitive pricing strategy could also push down the prices of these AI giants.