Everyone’s Rattled by the Rise of DeepSeek—Except Nvidia, Which Enabled It

On President Trump's inauguration day, Nvidia Chief Executive Jensen Huang wasn't sitting by the president's side at the Capitol like many tech moguls. He wasn't invited, an Nvidia official said, so he had gone to Beijing.

This seemingly minor historical detail has taken on new significance as DeepSeek, a Chinese AI startup, emerges as a serious player in the global AI race—powered in part by Nvidia's technology that was sold to China before recent export restrictions took effect.

While recent headlines have focused on DeepSeek's ability to develop efficient AI models that spooked Nvidia investors, the reality is more complex. Nvidia's early strategic decisions to establish deep ties with China's tech sector are now proving both controversial and prescient.

"Jensen saw the potential of the Chinese market long before most Western tech executives," explains Michael Zhang, technology analyst at Goldman Sachs. "Nvidia's early investments in China's AI ecosystem have created relationships that persist even amid current geopolitical tensions."

The company's approach to China has been markedly different from its Silicon Valley peers. While others focused primarily on the U.S. market, Nvidia built extensive partnerships with Chinese universities, research institutions, and technology companies, providing not just hardware but crucial technical support and training.

DeepSeek's rise, rather than threatening Nvidia's position, actually validates the company's long-term strategy. The Chinese startup's innovations in efficient AI model training still rely fundamentally on Nvidia's architecture and software ecosystem, even if they're using older-generation chips.

Industry experts note that this situation highlights the complexity of the AI supply chain. "DeepSeek's achievements don't diminish Nvidia's value proposition," says Dr. Sarah Chen of MIT's AI Lab. "If anything, they demonstrate how central Nvidia's technology stack has become to AI development globally."

The recent market reaction to DeepSeek's breakthrough—which temporarily wiped billions off Nvidia's market value—may have missed this crucial point. Nvidia's dominance in AI computing isn't just about raw processing power; it's about the extensive software ecosystem and development tools the company has built over decades.

Current export controls preventing Nvidia from selling its most advanced chips to China haven't severed these deep technological ties. Chinese companies continue to innovate using previously acquired Nvidia technology, showcasing both the durability of these relationships and the challenges of technological decoupling.

Huang's early vision of China as a crucial market for AI development has proven remarkably accurate. Even as geopolitical tensions rise and export controls tighten, the technological foundation Nvidia laid in China continues to influence the global AI landscape.

Looking ahead, the relationship between Nvidia and China's AI sector will likely grow more complex. While new sales of advanced chips are restricted, the technical knowledge and existing infrastructure built around Nvidia's technology continue to shape AI development in China.

The DeepSeek situation ultimately demonstrates that in the global AI race, technological relationships and dependencies are far more nuanced than stock market reactions might suggest. Nvidia's early commitment to the Chinese market, while politically complicated, has helped cement its position as a fundamental enabler of AI development worldwide.