Trump’s Revocation of AI Chip Ban Could Significantly Benefit DeepSeek in China

In recent weeks, Chinese AI startup DeepSeek has been making waves in the tech community. They’ve managed to outshine OpenAI’s o1 reasoning model capabilities in math, science, and coding, doing so at just a fraction of the cost. To put it into perspective, DeepSeek developed their R1 V3-powered AI model for a mere $6 million by employing reinforcement learning, which is about 3% of what it cost to create OpenAI’s flagship model.

This remarkable feat has sparked a surge of interest in DeepSeek, catapulting it to the top of the most downloaded free AI apps in the U.S. on Apple’s App Store, overtaking ChatGPT. Despite the buzz, former OpenAI board member Helen Toner believes DeepSeek has room for growth and could potentially become a dominant force in the AI space. However, she thinks this will only be possible if the Biden administration’s stringent 2023 export rules, which block advanced AI chips from being shipped to China, are lifted.

Toner feels that removing these restrictions could be a “huge victory” for both China and DeepSeek. In a discussion with Fortune, she speculated that Nvidia might leverage this situation to persuade President Trump to discard the controls, arguing that they hinder U.S. industry progress.

Amidst DeepSeek’s rising prominence, there are allegations that the company used data from Microsoft and OpenAI without permission, which could be a breach of copyright law. Microsoft and OpenAI, however, are no strangers to these types of lawsuits. OpenAI’s CEO, Sam Altman, has defended their position by stating that copyright laws don’t necessarily prevent the use of copyrighted data for training AI models. He emphasized that without access to certain data, creating something like ChatGPT would be impossible.

Toner remains uncertain about how Trump’s administration will handle the exportation rules set by Biden’s administration. She stated, “The big question is whether or not the Trump administration will pick up where the last administration left off.”

Reflecting on the situation, Helen Toner remarked, “It doesn’t make any sense to try to walk it back. We’ve paid the price… putting China on high alert that chips are a strategic technology, and incentivizing the whole global supply chain to avoid using U.S. components so as not to be subject to extraterritorial controls.”

In Biden’s final days in office, he introduced measures to further tighten these export controls on China, barring them from bypassing companies like NVIDIA through Huawei and TSMC. As AI technology rapidly evolves, it’s anyone’s guess how Trump will navigate these developments. Toner added, “But they could decide to step in and weaken it.”

While much about DeepSeek’s R1 development remains under wraps, it’s going to be fascinating to see how it fares against leading AI models. This curiosity is particularly piqued as OpenAI invests $500 billion in Stargate for building data centers across the U.S. to enhance their AI capabilities.

Toner concluded, “So far, DeepSeek is acting as a fast follower, not leading the pack. China is doing everything they can to keep up with the U.S. in AI, and they’re doing well at fast-following. But to imply they’re out ahead of us is clearly wrong.”