Trump’s Reversal on AI Chip Ban Could Significantly Benefit DeepSeek

In recent weeks, the Chinese AI startup DeepSeek has been making waves, gaining momentum with its impressive rise in capability. The startup’s AI model outperforms OpenAI’s o1 reasoning model in areas like math, science, and coding, while operating at just a fraction of the cost. To put it into perspective, DeepSeek’s R1 V3-powered model was developed using the reinforcement learning technique with a budget of $6 million, reportedly just 3% of what it cost OpenAI to create its flagship model.

This achievement has led to a surge in the popularity of DeepSeek, with the app dethroning ChatGPT to become the most downloaded free AI app in the U.S. on Apple’s App Store. Despite this success, Helen Toner, a former OpenAI board member, views DeepSeek as having more room to grow and possibly dominate the AI landscape. However, she believes this potential might be stifled due to the strict exportation rules of advanced AI chips, imposed on China by Biden’s administration in 2023.

Toner suggests that lifting these restrictions could result in a significant win for China and DeepSeek. In an interview with Fortune, she commented on the possibility of Nvidia convincing former President Trump to overturn these export controls, arguing that they only hinder U.S. industry.

Alongside its rapid ascent, DeepSeek faces allegations of using Microsoft and OpenAI’s data without permission, potentially breaching copyright laws. Microsoft and OpenAI themselves have been entangled in several copyright lawsuits. Sam Altman, CEO of OpenAI, counters that copyright law doesn’t strictly forbid the use of copyrighted material in training AI models, admitting such data is crucial for developing AI like ChatGPT.

Toner also expressed uncertainty about how the Trump administration might approach Biden’s strict exportation policies. “The big question is whether or not the Trump administration will pick up where the last administration left off,” she says.

She further elaborates on the challenges of reversing course now that the U.S. has alerted China to the strategic importance of AI chips. The measures have motivated the global supply chain to avoid U.S. components to steer clear of these controls.

In his final week as President, Biden implemented further measures to tighten these rules, thwarting China’s attempts to bypass restrictions using alternatives like Huawei or Taiwan’s TSMC.

As AI progresses swiftly, it remains to be seen how President Trump will handle these export controls. “But they could decide to step in and weaken it,” Toner added.

While the development journey of DeepSeek’s R1 remains somewhat under wraps, watching how it stacks up against top-tier AI models will be fascinating, especially with OpenAI making a $500 billion commitment to advance AI infrastructure through Stargate.

“So far, DeepSeek is acting as a fast follower, not leading the pack,” Toner noted. “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.”