The ongoing tensions between the U.S. and China have taken a significant turn in the world of AI development. 
DeepSeek, a Chinese AI company, is facing delays in launching its much-anticipated R2 AI model, largely due to U.S. export controls on high-end NVIDIA chips. These AI accelerators, specifically the H20 AI GPU, have become crucial for companies looking to develop cutting-edge models like DeepSeek’s R2.
Since President Trump’s administration, one of the primary goals has been to maintain American dominance in the AI race. This led to the implementation of export controls that prevent certain NVIDIA chips from reaching China. These restrictions are now being felt by Chinese firms, with DeepSeek struggling to access the necessary hardware for its new AI model.
Reports indicate that DeepSeek’s CEO, Liang Wenfeng, is dissatisfied with the performance of the R2 model, which has faced significant hurdles in terms of computing power. The shortage of NVIDIA chips has left Chinese cloud service providers (CSPs) unable to adopt the R2 model effectively, as they are struggling to gather the resources needed to support it.
While China has tried to circumvent these restrictions by securing chips through alternative channels, it’s clear that the latest round of export controls is having an impact on its AI capabilities. This comes as no surprise, considering DeepSeek’s previous success with the R1 model, which caused a notable dip in NVIDIA’s market cap. However, without sufficient access to high-performance GPUs, the R2 model is facing serious delays, with no clear timeline for its release.
DeepSeek’s situation is complicated further by the fact that many of NVIDIA’s H20 AI GPUs are already tied up in the domestic market, being used by CSPs running DeepSeek’s previous model. This has created a bottleneck, making it difficult for the company to secure enough hardware for the R2’s deployment. The lack of alternatives, such as those offered by Huawei, only adds to the pressure on DeepSeek.
In short, U.S. export controls have undoubtedly slowed China’s progress in the AI race, and it remains to be seen whether DeepSeek can overcome these challenges to get its R2 model to market.