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Chinese AI startup DeepSeek is developing its own artificial intelligence chip for inference workloads in a move that could reduce its dependence on Nvidia and Huawei, Reuters reported citing people familiar with the matter.
The chip is being designed to handle AI inference—the stage at which trained models generate responses to users—rather than the more compute-intensive task of training foundation models, the sources said.
If successful, the effort would mark a significant strategic shift for DeepSeek, which has so far been known primarily for developing efficient large language models rather than building AI hardware.
The move would also intensify competition in China's rapidly evolving AI semiconductor market, where technology companies are increasingly pursuing in-house chip development amid U.S. export restrictions on advanced AI processors.
News of the project weighed on Nvidia shares, which fell about 1.6% in premarket trading.
DeepSeek gained international attention last year after releasing highly efficient AI models that attracted widespread interest in both Silicon Valley and China, demonstrating competitive performance while using fewer computing resources than many rivals.
The company has traditionally focused on AI research rather than commercializing its technology through hardware or broader enterprise offerings.
China's AI chip market has changed significantly since the United States imposed export restrictions on advanced Nvidia processors, creating opportunities for domestic suppliers.
Huawei has emerged as the biggest beneficiary of those restrictions, capturing an estimated half of China's $50 billion AI chip market by supplying processors to companies including DeepSeek.
However, Huawei's position is increasingly being challenged as major Chinese technology companies such as Alibaba and Baidu develop their own AI chips to support their growing AI businesses.
According to the sources, DeepSeek's chip initiative remains in its early stages. The company has been working with external partners and holding discussions with chip design firms, foundries and memory suppliers for about a year.
The Hangzhou-based startup has also quietly expanded its semiconductor capabilities by hiring chip design engineers in recent months, with recruitment taking place privately rather than through public job postings, according to two of the sources.
The development underscores a broader trend among Chinese AI companies to build greater control over both AI models and the underlying computing infrastructure as geopolitical restrictions reshape the country's semiconductor ecosystem.
The chip is being designed to handle AI inference—the stage at which trained models generate responses to users—rather than the more compute-intensive task of training foundation models, the sources said.
If successful, the effort would mark a significant strategic shift for DeepSeek, which has so far been known primarily for developing efficient large language models rather than building AI hardware.
The move would also intensify competition in China's rapidly evolving AI semiconductor market, where technology companies are increasingly pursuing in-house chip development amid U.S. export restrictions on advanced AI processors.
News of the project weighed on Nvidia shares, which fell about 1.6% in premarket trading.
DeepSeek gained international attention last year after releasing highly efficient AI models that attracted widespread interest in both Silicon Valley and China, demonstrating competitive performance while using fewer computing resources than many rivals.
The company has traditionally focused on AI research rather than commercializing its technology through hardware or broader enterprise offerings.
China's AI chip market has changed significantly since the United States imposed export restrictions on advanced Nvidia processors, creating opportunities for domestic suppliers.
Huawei has emerged as the biggest beneficiary of those restrictions, capturing an estimated half of China's $50 billion AI chip market by supplying processors to companies including DeepSeek.
However, Huawei's position is increasingly being challenged as major Chinese technology companies such as Alibaba and Baidu develop their own AI chips to support their growing AI businesses.
According to the sources, DeepSeek's chip initiative remains in its early stages. The company has been working with external partners and holding discussions with chip design firms, foundries and memory suppliers for about a year.
The Hangzhou-based startup has also quietly expanded its semiconductor capabilities by hiring chip design engineers in recent months, with recruitment taking place privately rather than through public job postings, according to two of the sources.
The development underscores a broader trend among Chinese AI companies to build greater control over both AI models and the underlying computing infrastructure as geopolitical restrictions reshape the country's semiconductor ecosystem.
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