# Chinese AI labs pursue custom chips to lower costs but heavy upfront investment a risk > Source: > Published: 2026-07-09 08:00:11+00:00 # Chinese AI labs pursue custom chips to lower costs but heavy upfront investment a risk Custom silicon allows for hardware optimisation tailored to specific architectures, such as the DeepSeek-R1 model Chinese AI labs are increasingly pursuing proprietary chips, mirroring a global trend towards software-hardware integration, but industry insiders and analysts warn that the strategy carries risk due to the massive upfront investments required. “The core motivation for choosing in-house chips lies in pursuing [greater] hardware-software synergy and lowering long-term operating costs,” said Arisa Liu, chief director and research fellow at Taiwan Industry Economics Services. Paul Triolo, a partner and technology policy lead at DGA-Albright Stonebridge Group, said in his personal newsletter AIStackDecrypted that the proprietary efforts underscored how China’s leading model developers increasingly viewed silicon as a strategic extension of the model stack rather than simply another infrastructure input. DeepSeek has been quietly hiring chip-design talent without posting public job openings, according to two people familiar with the situation, who declined to be named as the matter was private. The Hangzhou-based start-up’s plans for a customised AI inference chip began roughly a year ago and remained at an early stage, according to a Reuters report on Tuesday. [GLM-5.2 model,](https://www.scmp.com/tech/tech-trends/article/3359170/zhipu-ai-releases-harness-glm-52-model-chinese-firm-takes-aim-anthropic?module=inline&pgtype=article)was in early talks with domestic chip-design companies about tailored AI processors amid a sharp increase in its daily token usage, The Information reported on Tuesday.