DeepSeek success ‘not just result of IP theft and propaganda’: CSIS
A new report by the Center for Strategic and International Studies (‘CSIS’) warns that Chinese AI firm DeepSeek represents a significant narrowing of the technology gap between the United States and China, despite years of export controls on advanced semiconductors and AI technology.
The comprehensive 28-page analysis by Gregory Allen, director of CSIS’s Wadhwani AI Center, details how DeepSeek has emerged from relative obscurity to become ‘a global sensation attracting the attention of heads of state, global CEOs, top investors, and the general public’ following the recent release of its R1 model.
‘With the release of its R1 model on January 20, 2025—the same day as President Trump’s second inauguration—DeepSeek has cemented its reputation as the top frontier AI research lab in China and caused a reassessment of assumptions about the landscape of global AI competition,’ Allen writes.
The report reveals that DeepSeek’s technological achievements were not merely the result of intellectual property theft, as some Western commentators initially claimed. Instead, the company has demonstrated ‘genuine technological breakthroughs of its own’ alongside implementing innovations already known to US companies.
‘It would be a great mistake for U.S. policymakers to ignore DeepSeek or to suggest that its accomplishments are merely a combination of intellectual property theft and misleading Chinese propaganda,’ Allen cautions in the report.
DeepSeek’s success partially reflects failures in US export control implementation, according to the analysis. The report details how Nvidia was able to circumvent initial restrictions by modifying chips: ‘What the U.S. government architects of the October 2022 export control policy did not realize was that Nvidia had a mechanism for post-manufacturing modification of its existing chip products,’ creating the A800 and H800 chip lines that maintained near-state-of-the-art performance while technically complying with export regulations.
The report further reveals that Huawei, China’s most advanced AI chip designer, has made significant progress in advancing domestic production capabilities. According to Allen’s sources, ‘TSMC manufactured more than 2 million Ascend 910B logic dies and that all of these are now with Huawei’ through shell companies in violation of export controls. ‘If true, this is enough dies to make 1 million Ascend 910C units,’ Allen writes.
Additionally, Huawei has successfully relocated US-built semiconductor manufacturing equipment between Chinese companies: Sources told CSIS that Huawei, the ‘most important customer’ of SMIC, the partially state-owned publicly listed Chinese foundry, has successfully managed to move stockpiled US-built equipment from SiEn, Pensun and Huawei’s fab in Dongguan to SMIC’s SN2 facility in Shanghai.
The report quotes Huawei founder Ren Zhengfei, who recently told Chinese President Xi Jinping that ‘his previous concerns about the lack of domestic advanced semiconductor production and the damaging impacts of U.S. export controls had eased because of recent breakthroughs by Huawei and its partners.’ Ren further claimed to be ‘leading a network of more than 2,000 Chinese companies who are collectively working to ensure that China achieves self-sufficiency of more than 70 percent across the entire semiconductor value chain by 2028.’
Allen concludes that while US firms still lead the race toward advanced artificial intelligence, ‘the gap has narrowed significantly, and it is unrealistic to expect a lead of more than a year or two, even with extremely aggressive export controls.’
He warns that ‘all the margin for sloppy implementation of export controls or tolerance of large-scale chip smuggling has already been consumed. There is no more time to waste.’
https://www.csis.org/analysis/deepseek-huawei-export-controls-and-future-us-china-ai-race
