Khaberni - The Chinese AI company "DeepC" sparked wide controversy after reports revealed its potential use of banned and smuggled advanced processors for the purpose of training its massive language models, raising questions about smuggling and international tech regulation.
The company topped headlines in early 2025 after its free app became the most downloaded on the App Store, surpassing ChatGPT, thanks to low training costs that did not exceed 6 million dollars, much less than the costs of training major models like GPT-4 or Claude 3.
However, tests demonstrated poor performance by the model, recording a mere 17% accuracy, and providing incorrect information in 39% of responses, while news-related answers were vague or unhelpful 53% of the time. The model further caused concern by adopting positions aligned with Beijing when responding to political questions, even without any references to China.
According to an article by The Information, it is suspected that "DeepC" relied on thousands of "Nvidia" processors built on the Blackwell architecture, which are banned from export to China under US restrictions, using fictitious data centers in Southeast Asia before shipping them to China disguised as other goods.
Despite Nvidia’s denial of these allegations, observers considered the company's statement contradictory after the US Department of Justice announced the dismantling of a processor smuggling network worth 160 million dollars, while Nvidia revealed measures to track the location of processors, which some considered an implicit acknowledgment of the dangers of smuggling.
In contrast, "DeepC" denied utilizing Blackwell processors, insisting on its reliance on Nvidia H800 processors and Huawei Ascend 910C chips, which are local Chinese processors comparable to some of the major international processors but less efficient due to manufacturing limitations.
This controversy comes at a time when Chinese authorities encourage companies to rely on local solutions, while the United States grants limited exceptions for exporting advanced processors to China, in return for a share of the revenues, a move described by some as smart but which raises doubts about its practical effectiveness in tackling Chinese restrictions.
