US accuses Chinese AI firm DeepSeek of aiding Beijing's military and dodging chip export rules

The United States has accused Chinese unreal intelligence service business firm DeepSeek of aiding peiping’s armed services and intelligence services, with a senior U.S. Official claiming the company has also attempted to bypass export restrictions to acquire advanced American semiconductor technology.

The allegations, disclosed in an interview withReuters, mark a significant escalation in Washington’s scrutiny of Chinese AI firms amid an ongoing technological rivalry and broader trade tensions between the two global powers.

According to the U.S. State Department official, who spoke on condition of anonymity, DeepSeek has not only collaborated with China’s military and intelligence sectors but has also tried to obtain restricted Nvidia chips through front companies based in Southeast Asia.

“DeepSeek has willingly provided and is likely to continue supporting China’s military and intelligence operations,” the official stated. “This goes well beyond simple open-source AI model access.”

The Hangzhou-based startup shocked the global tech community earlier this year by claiming its AI reasoning models, DeepSeek-V3 and DeepSeek-R1, matched or exceeded those developed by U.S. Giants like OpenAI and Meta, at a significantly lower cost. The company said it had spent just $5.58 million on computing power to train its models, a figure that has drawn scepticism from AI researchers who believe the actual costs were likely far higher.

The U.S. Official further alleged that DeepSeek is sharing user data and analytics with China’s surveillance systems. While Chinese law mandates that firms must comply with government data requests, this explicit claim, if true, could raise serious privacy concerns for DeepSeek’s tens of millions of daily global users.

U.S. Lawmakers have previously warned that DeepSeek transmits American user data through infrastructure linked to China Mobile, a state-owned telecom operator. DeepSeek has so far remained silent on questions related to its privacy policies and alleged data-sharing practices.

Adding to concerns, DeepSeek has reportedly been cited over 150 times in procurement records linked to China’s People’s Liberation Army (PLA) and associated defence entities. The U.S. Official claimed the firm has supplied technology to PLA research bodies, thoughReuters was unable to independently verify these procurement links.

Despite U.S. Restrictions on the export of Nvidia’s high-end H100 chips to China since 2022, DeepSeek has reportedly acquired a substantial quantity of them. The U.S. Official alleged that the company used shell entities in Southeast Asia to access the chips and is attempting to utilise regional data centres to remotely operate the hardware.

While the official declined to confirm whether DeepSeek had successfully evaded these controls, the suggestion that one of China’s most high-profile AI firms could be skirting U.S. Restrictions is likely to trigger further investigations.

Responding toReuters, Nvidia said it does not support any firm violating export controls or appearing on U.S. Entity lists. “With current export regulations, we are effectively excluded from the China data centre market, now served mainly by domestic players such as Huawei,” the company said.

Reuters reported that DeepSeek had obtained H100 chips, others disputed the scale of its holdings. Nvidia stated its own review found DeepSeek had used H800 processors, a less powerful, export-compliant variant, rather than H100s.

Earlier this year, Singaporean authorities charged three individuals with fraud in a case linked to the illicit transfer of Nvidia chips to DeepSeek. Meanwhile, Malaysian officials confirmed last week that they are investigating whether a Chinese company is using Nvidia-equipped servers in the country to train large language models, potentially in violation of domestic regulations.

Despite mounting concerns, DeepSeek has not yet been added to any U.S. Trade blacklist, and there is no public evidence that Nvidia knowingly facilitated any military-related work by the company. Under U.S. Rules, companies must refrain from exporting advanced chips to Chinese firms that are either blacklisted or involved in the development of weapons of mass destruction.

Nonetheless, the developments are likely to increase pressure on Washington to tighten its monitoring of Chinese tech firms, particularly those with potential military links.

(With inputs from Reuters)

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