US mulls penalties to block DeepSeek from buying American technology, NYT reports

The Trump administration is weighing penalties that would block China's DeepSeek from buying U.S. technology and is debating barring Americans' access to its services, the New York Times reported on Wednesday.

The launch of China's low-cost AI model, DeepSeek, has rattled the AI ecosystem. The U.S. government has since taken steps to crack down on the Chinese start-up and its support from chip maker Nvidia.

Nvidia's AI chips have been a key focus of U.S. export controls, as U.S. officials aim to prevent the most advanced chips from being sold to China in an effort to maintain a lead in the AI race.

The Trump administration this week moved to restrict Nvidia's sale of AI chips to China.

The U.S. House Select Committee on China said in a report that "it has sent a formal letter to Nvidia demanding answers about sales to China and Southeast Asia to examine whether and how its chips ended up powering DeepSeek's AI models—despite U.S. export restrictions".

Nvidia warned on Tuesday of a $5.5 billion hit after Washington restricted exports of its H20 AI chip to China. The move to restrict H20 shipments is Trump's latest effort to limit China's access to advanced semiconductors.

The U.S. has banned exports of Nvidia's most advanced chips to China since 2022, concerned that advanced technologies could be used by China to build up its military capabilities.

DeepSeek, White house and the Commerce Department did not immediately respond to Reuters' requests for comment.