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The Geopolitical Game of AI Chip Control

The current situation centers on the rising threat of US-made, high-performance Artificial Intelligence (AI) chips, particularly those manufactured by Nvidia, being smuggled into China despite stringent US export controls. The US government has imposed escalating restrictions to prevent China's military and technological advancements from leveraging cutting-edge US technology. Recently, reports surfaced alleging that China's DeepSeek AI models may have been trained using smuggled Nvidia Blackwell chips, which are the company's next-generation processors and are not approved for sale in China. While Nvidia has publicly stated it has seen no substantiation of "phantom data centers" being constructed for the sole purpose of smuggling, the reports highlight the intensity of the demand and the high-stakes nature of these export controls. This development occurs even as Nvidia secured a recent, limited approval to sell its older H200 AI chips to approved customers in China.

Diligence is Your Best Defence Against Geopolitical Spillover

The most significant insight for startup founders, regardless of whether they manufacture chips or use them, is that geopolitical tensions are now a direct, material factor in your technology supply chain and compliance program. Nvidia's reported testing of optional, location-verification tracking software on its upcoming Blackwell chips is a direct response to this regulatory and security pressure. For founders, this signals an era where technology suppliers are becoming de facto enforcement agents for US export controls. If your startup builds hardware, uses high-end chips in any capacity, or relies on supply chain partners who do, you must understand that the end-user and end-use of your technology are under intense scrutiny. This risk extends beyond just hardware; if you are an AI company whose models are trained on specific hardware, the provenance and location of that training infrastructure could become a critical diligence point for investors, partners, and regulators.

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