China's DeepSeek developing its own AI chip, sources say

Chinese AI startup DeepSeek is reportedly working on developing its own artificial intelligence chip, according to three sources familiar with the matter. The move could help the company reduce its dependence on chips from Nvidia and Huawei, which it currently relies on to train and operate its AI models.

The chip is being designed specifically for AI inference, the process where a trained model generates responses for users rather than for training new AI systems, the sources said.

If successful, DeepSeek’s entry into semiconductor development would represent a significant shift for the company, which has gained global recognition for its advanced AI models and is seen in China as a leading force in the sector. The move could also increase competition for Huawei, a major supplier of AI chips in China.

News of the development contributed to a slight decline in Nvidia’s share price in premarket trading. Analysts said the impact on Nvidia’s business remains limited, noting that DeepSeek’s potential chip production would likely focus on the Chinese market.

DeepSeek gained international attention after launching highly efficient AI models that surprised many in Silicon Valley and government circles. The company has traditionally focused on AI research and model development rather than hardware production.

Huawei has strengthened its position in China’s AI chip market due to US restrictions on advanced chip exports to China, supplying DeepSeek and other major technology companies. However, Huawei is facing growing competition from firms such as Alibaba and Baidu, which are also developing their own AI chips.

DeepSeek’s semiconductor project is still in its early stages. The company has reportedly been engaging with chip-design firms, manufacturers and memory companies, while quietly expanding its team of chip engineers.

The initiative reflects a broader global trend among AI companies seeking more control over the hardware powering their systems and reducing reliance on Nvidia’s technology.