DeepSeek Developing Own AI Chip to Reduce Reliance on Nvidia and Huawei

Jul 7, 2026

Chinese AI startup DeepSeek is developing its own chip for inference to reduce reliance on Nvidia and Huawei, a strategic shift driven by U.S. export controls. The early-stage project coincides with DeepSeek's first external funding round, which seeks to raise $7 billion at a valuation up to $59 billion. The move follows a global trend of AI firms like OpenAI and Anthropic bringing hardware development in-house.

DeepSeek chip development initiative

▪The chip is designed for inference, the stage where a trained model generates responses, rather than for training new models.
▪The company is holding discussions with external partners, including chip-design, foundry, and memory companies.
▪DeepSeek has been privately hiring chip-design engineers in recent months without public job postings.
▪Chinese AI startup DeepSeek is developing its own artificial intelligence chip.
▪The chip development project is in its early stages and began about a year ago.

Chinese AI chip market dynamics

▪A U.S. ban on advanced chip exports to China helped Huawei gain around half of the $50 billion domestic AI chip market.
▪Huawei's market dominance is weakening as rivals like Alibaba and Baidu also develop their own AI chips.
▪Developing an in-house chip could reduce DeepSeek's reliance on processors from Nvidia and Huawei.
▪DeepSeek has previously used both Nvidia and Huawei chips, adapting its V4 model for Huawei's Ascend processors.

Global AI hardware trends

▪Developing in-house chips is a global trend, with AI developers seeking greater control over hardware.
▪AI company Anthropic is also reportedly considering building its own AI chips.
▪OpenAI recently unveiled its first custom inference chip, named Jalapeno, which was developed with Broadcom.

U.S. export control restrictions

▪U.S. restrictions also cut China's access to high-bandwidth memory and prevent Chinese designers from using the most advanced overseas foundries.
▪DeepSeek's R1 model was trained on Nvidia's H800, a chip designed for China that the U.S. banned in late 2023.
▪U.S. export controls bar Chinese companies from buying Nvidia's most advanced chips.

AI inference chip demand

▪Specialized inference chips can be cheaper and less power-hungry than general-purpose GPUs used for training.
▪Inference chips target the fastest-growing segment of AI computing demand as more work shifts from training models to running them.

DeepSeek funding strategy shift

▪The company is slated to raise $7 billion in a funding round, valuing it at between $52 billion and $59 billion.
▪Seeking external investment reverses DeepSeek's long-standing strategy of rejecting outside capital.
▪DeepSeek's chip initiative coincides with the company raising outside capital for the first time.