Report: China’s DeepSeek follows OpenAI in developing its own custom inference chips

DeepSeek Ltd., one of China’s most visible artificial intelligence companies, is pushing to design its own, in-house silicon aimed at inference workloads, according to a report by Reuters today.

The report cites three people familiar with the company’s plans as saying that it has been exploring the concept of developing its own AI accelerators for about a year, but the initiative is still at the early stages. So far, DeepSeek has contacted outside partners and held discussions with chip design, foundry and memory companies, while also trying to hire a number of experienced chip designers to join its engineering teams.

The focus on inference chip is telling, because this is the stage where a trained model generates responses for users, and it’s an important workload that AI companies must control if they want to be able to commercialize their most advanced models. Though AI training is what made DeepSeek famous, inference is what becomes the recurring cost center that then drives revenue once people start using those models.

DeepSeek’s goal seems to be to reduce its reliance on Nvidia Corp. and Huawei Technologies Co. Ltd., which until now have been its two primary suppliers of AI chips. When the company shot to fame in January 2025 with its low-cost yet high-performing R1 model, triggering a rout in U.S. technology stocks, it said it had trained that system on Nvidia’s H800 chips. That hardware was designed specifically for the Chinese market and had been throttled compared with what was being sold to U.S. firms, but it was later banned by the U.S. under President Donald Trump’s administration.

Since then, DeepSeek has leaned more heavily on Huawei’s Ascend graphics processing units. In April it released its most advanced V4 model, which was designed to run on Huawei’s chips, leading to a surge of sales of the Ascend 950 to Chinese technology firms after its launch.

The U.S. ban on Nvidia chip exports to China has helped Huawei to become the dominant chip supplier in China, but Reuters’ sources said DeepSeek doesn’t want to become too reliant on that company. By seeking to develop its own, in-house AI processors, DeepSeek is also following the playbook of U.S. AI firms like OpenAI Group PBC and Anthropic PBC, which are also seeking greater control over the hardware that power its models. In OpenAI’s case, it recently unveiled a new custom inference chip called Jalapeño that was co-designed with Broadcom Inc.

While OpenAI says its primary concern is to reduce its reliance on Nvidia, it’s believed that the company also has a desire to gain more control over the tech stack behind its products, similar to Apple Inc., which designs the chips for its iPhones and Mac laptops. Furthermore, designing its own silicon could provide it with an advantage at a time when access to data center compute resources is becoming increasingly constrained, Reuters reported.

Developing AI chips is an extremely costly endeavor, but DeepSeek is believed to have plenty of money to throw at such an initiative after it recently raised $7.4 billion in funding from a host of Chinese investors last month.

DeepSeek isn’t alone in seeing the advantages of developing its own silicon. Reuters reported that rivals uch as Alibaba Group Holding Ltd. and Baidu Inc. are also working on their own AI processors.

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