DeepSeek Under Scrutiny: Allegations of Military Aid and Export Control Evasion

Chinese AI firm DeepSeek reportedly using shell companies to try and evade U.S. chip restrictions -- allegedly procured unknown number of H100 AI GPUs after ban, but Nvidia denies the claim

A new report claims that Chinese AI juggernaut DeepSeek is helping China's military and intelligence operations, and may have even used shell companies to help procure Nvidia chips that are otherwise covered by export restrictions that prevent their sale to China, according to Reuters. A senior State Department official told Reuters," We understand that DeepSeek has willingly provided and will likely continue to provide support to China's military and intelligence operations, adding the effort goes "above and beyond" open-source access to DeepSeek's AI models. More interestingly, the official said DeepSeek was using workarounds to get access to advanced Nvidia chips, evading export controls. It is claimed DeepSeek has access to "large volumes" of Nvidia's H100 chip, which has been covered by Washington export restrictions since 2022. It is alleged by the official in the interview that DeepSeek tried to use Southeast Asia shell companies to get around the restrictions, but wouldn't be drawn on whether it was successful in its endeavours. The same official also claimed DeepSeek was trying to access data centers in Southeast Asia to remotely access U.S. chips. The news is a continuing sign that Chinese companies are trying their level best to skirt U.S. export restrictions to get their hands on Nvidia's coveted hardware. It follows reports of Chinese companies flying hard drives to Malaysia in suitcases to try and train AI models using Nvidia hardware in rented servers, a phenomenon Malaysia is now investigating. However, Reuters reports that three sources familiar with the matter told the outlet that DeepSeek does indeed have H100 chips, which it procured after the U.S. banned their sale to China. Notably, it is claimed that the number is much smaller than the 50,000 chips alleged by Scale AI CEO Alexandr Wang in January. Perhaps understandably, Reuters was not able to verify the number of H100 chips DeepSeek may or may not have, but Nvidia denies the claim. "Our review indicates that DeepSeek used lawfully acquired H800 products, not H100," Nvidia told Reuters. The H800 chip is a tweaked version of the H100, specifically designed for export to China, sporting nerfed NVLink bandwidth and absent FP64 capabilities.

AI disruptor DeepSeek's next-gen model delayed by Nvidia H20 restrictions -- short supply of accelerators hinders development

DeepSeek attracted a lot of attention with its R1 AI model earlier this year, but it looks like development of the next-generation R2 model has stalled due to shortage of Nvidia's H20 processors in China, reports The Information. DeepSeek itself has not commented on when its R2 model is set to be available. DeepSeek used a cluster consisting of 50,000 Hopper GPUs -- including 30,000 H20s, 10,000 H800s, and 10,000 H100s -- obtained by its investor High-Flyer Capital Management -- to train its R1 model. It is unclear whether R2 has already been fully pre-trained. The Information reports citing two individuals familiar with the project that DeepSeek team has been working intensively on the model, but CEO Liang Wenfeng is not yet satisfied with its capabilities. Work continues internally to improve performance before the model is cleared for deployment. R1 was quickly and widely adopted by a range of users, including private startups, big companies, and government-affiliated groups. Most of these users ran the model on Nvidia's H20 processors. Now that H20 shipments are restricted, it is already causing problems, limiting how R1 is used today and making it harder to get ready for the launch of R2, according to The Information report. Should DeepSeek's upcoming R2 model surpass the capabilities of currently available open alternatives, usage is expected to surge beyond what Chinese cloud platforms can handle, according to staff at those firms cited by The Information. Most organizations relying on the earlier R1 model are said to operate it using Nvidia's H20 processors, which are now in short supply. The U.S. government restricted sales of Nvidia's H20 processors for AI training and inference in mid-April. While the unit is a severely cut-down version of the popular H100 GPU, due to reliance of Chinese AI companies on Nvidia's CUDA software stack, H20 was a quite popular product among such entities in the People's Republic with Nvidia selling billions of dollars' worth of H20 processors every quarter. DeepSeek's AI software is reportedly optimized for Nvidia's hardware, which makes the company particularly vulnerable to U.S. policy decisions. Although the company claims to have developed its models using far fewer resources than U.S. companies like OpenAI, the recent export curbs highlight a critical weakness: China's top AI companies remain heavily dependent on American hardware. Meanwhile, OpenAI has unofficially accused DeepSeek of using its proprietary models during the development of R1, although the company has not addressed these claims publicly.

DeepSeek R2 launch stalled as CEO balks at progress, The Information reports

June 26 (Reuters) - Chinese AI startup DeepSeek has not yet determined the timing of the release of its R2 model as CEO Liang Wenfeng is not satisfied with its performance, The Information reported on Thursday, citing two people with knowledge of the situation. R2, a successor to DeepSeek's wildly popular R1 reasoning model, was planned for release in May with goals to produce better coding and reason in languages beyond English, Reuters reported earlier this year. Over the past several months, DeepSeek's engineers have been working to refine R2 until Liang gives the green light for release, according to The Information, opens new tab. However, a fast adoption of R2 could be difficult due to a shortage of Nvidia server chips in China as a result of U.S. export regulations, the report said, citing employees of top Chinese cloud firms that offer DeepSeek's models to enterprise customers. A potential surge in demand for R2 would overwhelm Chinese cloud providers, who need advanced Nvidia chips to run AI models, the report said. DeepSeek did not immediately respond to a Reuters request for comment. DeepSeek has been in touch with some Chinese cloud companies, providing them with technical specifications to guide their plans for hosting and distributing the model from their servers, the report said. Among its cloud customers currently using R1, the majority are running the model with Nvidia's H20 chips, The Information said. Fresh export curbs imposed by the Trump administration in April have prevented Nvidia from selling in the Chinese market its H20 chips - the only AI processors it could legally export to the country at the time. Reporting by Deborah Sophia in Bengaluru; Editing by Arun Koyyur Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Artificial Intelligence

Exclusive: DeepSeek aids China's military and evaded export controls, US official says

WASHINGTON/SAN FRANCISCO, June 23 (Reuters) - AI firm DeepSeek is aiding China's military and intelligence operations, a senior U.S. official told Reuters, adding that the Chinese tech startup sought to use Southeast Asian shell companies to access high-end semiconductors that cannot be shipped to China under U.S. rules. Hangzhou-based DeepSeek sent shockwaves through the technology world in January, claiming its artificial intelligence reasoning models were on par with or better than U.S. industry-leading models at a fraction of the cost. "We understand that DeepSeek has willingly provided and will likely continue to provide support to China's military and intelligence operations," a senior State Department official told Reuters in an interview. "This effort goes above and beyond open-source access to DeepSeek's AI models," the official said, speaking on condition of anonymity in order to speak about U.S. government information. The U.S. government's assessment of DeepSeek's activities and links to the Chinese government have not been previously reported and come amid a wide-scale U.S.-China trade war. Among the allegations, the official said DeepSeek is sharing user information and statistics with Beijing's surveillance apparatus. Chinese law requires companies operating in China to provide data to the government when requested. But the suggestion that DeepSeek is already doing so is likely to raise privacy and other concerns for the firm's tens of millions of daily global users. The U.S. also maintains restrictions on companies it believes are linked to China's military-industrial complex. U.S. lawmakers have previously said that DeepSeek, based on its privacy disclosure statements, transmits American users' data to China through "backend infrastructure" connected to China Mobile, a Chinese state-owned telecommunications giant. DeepSeek did not respond to questions about its privacy practices. The company is also referenced more than 150 times in procurement records for China's People's Liberation Army and other entities affiliated with the Chinese defense industrial base, said the official, adding that DeepSeek had provided technology services to PLA research institutions. Reuters could not independently verify the procurement data. The official also said the company was employing workarounds to U.S. export controls to gain access to advanced U.S.-made chips. The U.S. conclusions reflect a growing skepticism in Washington that the capabilities behind the rapid rise of one of China's flagship AI enterprises may have been exaggerated and relied heavily on U.S. technology. DeepSeek has access to "large volumes" of U.S. firm Nvidia's (NVDA.O), opens new tab high-end H100 chips, said the official. Since 2022 those chips have been under U.S. export restrictions due to Washington's concerns that China could use them to advance its military capabilities or jump ahead in the AI race. "DeepSeek sought to use shell companies in Southeast Asia to evade export controls, and DeepSeek is seeking to access data centers in Southeast Asia to remotely access U.S. chips," the official said. The official declined to say if DeepSeek had successfully evaded export controls or offer further details about the shell companies. DeepSeek also did not respond to questions about its acquisition of Nvidia chips or the alleged use of shell companies. When asked if the U.S. would implement further export controls or sanctions against DeepSeek, the official said the department had "nothing to announce at this time." China's foreign ministry and commerce ministry did not respond to a Reuters request for comment. "We do not support parties that have violated U.S. export controls or are on the U.S. entity lists," an Nvidia spokesman said in a prepared statement, adding that "with the current export controls, we are effectively out of the China data center market, which is now served only by competitors such as Huawei." ACCESS TO RESTRICTED CHIPS DeepSeek has said two of its AI models that Silicon Valley executives and U.S. tech company engineers have showered with praise - DeepSeek-V3 and DeepSeek-R1 - are on par with OpenAI and Meta's (META.O), opens new tab most advanced models. AI experts, however, have expressed skepticism, arguing the true costs of training the models were likely much higher than the $5.58 million the startup said was spent on computing power. Reuters has previously reported that U.S. officials were investigating whether DeepSeek had access to restricted AI chips. DeepSeek has H100 chips that it procured after the U.S. banned Nvidia from selling those chips to China, three sources familiar with the matter told Reuters, adding that the number was far smaller than the 50,000 H100s that the CEO of another AI startup had claimed DeepSeek possesses in a January interview with CNBC. Reuters was unable to verify the number of H100 chips DeepSeek has. "Our review indicates that DeepSeek used lawfully acquired H800 products, not H100," an Nvidia spokesman said, responding to a Reuters query about DeepSeek's alleged usage of H100 chips. In February, Singapore charged three men with fraud in a case domestic media have linked to the movement of Nvidia's advanced chips from the city state to DeepSeek. China has also been suspected of finding ways to use advanced U.S. chips remotely. While importing advanced Nvidia chips into China without a license violates U.S. export rules, Chinese companies are still allowed to access those same chips remotely in data centers in non-restricted countries. The exceptions are when a Chinese company is on a U.S. trade blacklist or the chip exporter has knowledge that the Chinese firm is using its chips to help develop weapons of mass destruction. U.S. officials have not placed DeepSeek on any U.S. trade blacklists yet and have not alleged that Nvidia had any knowledge of DeepSeek's work with the Chinese military. Malaysia's trade ministry said last week that it was investigating whether an unnamed Chinese company in the country was using servers equipped with Nvidia chips for large language model training and that it was examining whether any domestic law or regulation had been breached. Reporting by Michael Martina in Washington and Stephen Nellis in San Francisco; Additional reporting by Fanny Potkin in Singapore; Editing by Don Durfee, Kenneth Li, Cynthia Osterman, Deepa Babington and Himani Sarkar Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:China

DeepSeek aids China's military and evaded export controls, US official says: Reuters

AI firm DeepSeek is aiding China's military and intelligence operations, a senior U.S. official told Reuters, adding that the Chinese tech startup sought to use Southeast Asian shell companies to access high-end semiconductors that cannot be shipped to China under U.S. rules. The U.S. conclusions reflect a growing conviction in Washington that the capabilities behind the rapid rise of one of China's flagship AI enterprises may have been exaggerated and relied heavily on U.S. technology. Hangzhou-based DeepSeek sent shockwaves through the technology world in January, saying its artificial intelligence reasoning models were on par with or better than U.S. industry-leading models at a fraction of the cost. "We understand that DeepSeek has willingly provided and will likely continue to provide support to China's military and intelligence operations," a senior State Department official told Reuters in an interview. "This effort goes above and beyond open-source access to DeepSeek's AI models," the official said, speaking on condition of anonymity in order to speak about U.S. government information. The U.S. government's assessment of DeepSeek's activities and links to the Chinese government have not been previously reported and come amid a wide-scale U.S.-China trade war. Among the allegations, the official said DeepSeek is sharing user information and statistics with Beijing's surveillance apparatus. The big three U.S. cloud providers Amazon, Microsoft and Alphabet's Google offer DeepSeek to customers. Chinese law requires companies operating in China to provide data to the government when requested. But the suggestion that DeepSeek is already doing so is likely to raise privacy and other concerns for the firm's tens of millions of daily global users. The U.S. also maintains restrictions on companies it believes are linked to China's military-industrial complex. U.S. lawmakers have previously said that DeepSeek, based on its privacy disclosure statements, transmits American users' data to China through "backend infrastructure" connected to China Mobile, a Chinese state-owned telecommunications giant. DeepSeek did not respond to questions about its privacy practices. The company is also referenced more than 150 times in procurement records for China's People's Liberation Army and other entities affiliated with the Chinese defense industrial base, said the official, adding that DeepSeek had provided technology services to PLA research institutions. Reuters could not independently verify the procurement data. The official also said the company was employing workarounds to U.S. export controls to gain access to advanced U.S.-made chips. DeepSeek has access to "large volumes" of U.S. firm Nvidia's high-end H100 chips, said the official. Since 2022 those chips have been under U.S. export restrictions due to Washington's concerns that China could use them to advance its military capabilities or jump ahead in the AI race. "DeepSeek sought to use shell companies in Southeast Asia to evade export controls, and DeepSeek is seeking to access data centers in Southeast Asia to remotely access U.S. chips," the official said. The official declined to say if DeepSeek had successfully evaded export controls or offer further details about the shell companies. DeepSeek also did not respond to questions about its acquisition of Nvidia chips or the alleged use of shell companies. When asked if the U.S. would implement further export controls or sanctions against DeepSeek, the official said the department had "nothing to announce at this time." China's foreign ministry and commerce ministry did not respond to a Reuters request for comment.

Report: DeepSeek's newest model delayed by GPU export restrictions - SiliconANGLE

Report: DeepSeek's newest model delayed by GPU export restrictions China's top artificial intelligence company DeepSeek Ltd. has reportedly come unstuck in its efforts to develop its next-generation R2 reasoning model, because it cannot get its hands on enough of Nvidia Corp.'s graphics processing units, according to a report. The Information cited two anonymous sources who are familiar with DeepSeek's efforts as saying that the company has been working on the upcoming R2 model for several months, but Chief Executive Liang Wengfeng is not yet satisfied with it. However, the company cannot improve its capabilities with the limited number of GPUs at its disposal. DeepSeek shot to fame earlier this year when it debuted its original reasoning model R1. It proved to be more than a match for the most advanced models developed by U.S. companies such as OpenAI, Anthropic PBC and Meta Platforms Inc., despite being built at a fraction of the cost. According to The Information, DeepSeek trained R1 on a cluster of 50,000 Hopper GPUs, which included about 10,000 H100s, 10,000 H800s and about 30,000 of the lower-powered H20 GPUs that were purpose-built for the Chinese market. Chinese companies have never been able to purchase the H100 or H800 GPUs legally. It's believed that some of them were secretly supplied to DeepSeek by its investor High-Flyer Capital Management, while others were procured via shell companies that access public cloud infrastructure services. The H20 GPUs were obtained legally, but they have since become hard to come by because of new sanctions by the U.S. government that prohibit their export to China. Part of the problem is that many of the H20 GPUs in China are already being used by DeepSeek's customers. The Information says the R1 model has been widely adopted by Chinese companies and government agencies, and most of them run it on H20 GPUs in the cloud. So there's no more capacity available for DeepSeek to train its latest model. The H20 GPU shortages apparently are already causing problems with R1, limiting how it's used by Chinese firms. If the R2 model significantly improves on R1, it's expected that the demand for the model will increase beyond what Chinese cloud infrastructure providers can handle, according to staff interviewed by The Information. The H20 processor is comparable to the H100 GPU that Nvidia sells to western companies, but its bandwidth and connectivity had been throttled to meet earlier restrictions on the types of chips that could be exported to China. However, President Donald Trump's administration decided that even this scaled-down chip is too powerful to be shipped to its geopolitical rival, and promptly slapped new restrictions on the country in April, banning its export there. That decision has reportedly thrown a major spanner in the works of Chinese AI developers. Though there are some domestic alternatives available, such as Huawei Technologies Co. Ltd.'s Ascend 910B chipset, these are even less powerful than the H20 and they lack support for Nvidia's CUDA software stack - a programming architecture that's used to optimize applications and AI models to run on Nvidia's GPUs. That's problematic because virtually all Chinese AI developers are thought to be using the CUDA software. The Information says DeepSeek's R1 and R2 models are also optimized for Nvidia's chips, and its inability to access them could prove to be a major setback in its efforts to keep pace with its U.S. rivals.

Report: DeepSeek's newest model delayed due to GPU export restrictions - SiliconANGLE

Report: DeepSeek's newest model delayed due to GPU export restrictions China's top artificial intelligence company DeepSeek Ltd. has reportedly come unstuck in its efforts to develop its next-generation R2 reasoning model, because it cannot get its hands on enough of Nvidia Corp.'s graphics processing units, according to a report. The Information cited two anonymous sources who are familiar with DeepSeek's efforts as saying that the company has been working on the upcoming R2 model for several months, but its Chief Executive Liang Wengfeng is not yet satisfied with it. However, the company cannot improve its capabilities with the limited number of GPUs at its disposal. DeepSeek shot to fame earlier this year when it debuted its original reasoning model R1, which proved to be more than a match for the most advanced models developed by U.S. companies like OpenAI, Anthropic PBC and Meta Platforms Inc., despite being built at a fraction of the cost. According to The Information, DeepSeek trained R1 on a cluster of 50,000 Hopper GPUs, which included around 10,000 H100s, 10,000 H800s, and around 30,000 of the lower-powered H20 GPUs that were purpose-built for the Chinese market. Chinese companies have never been able to purchase the H100 or H800 GPUs legally, and it's thought that some of them were secretly supplied to DeepSeek by its investor High-Flyer Capital Management, while others were procured via shell companies that access public cloud infrastructure services. The H20 GPUs were obtained legally, but they have since become hard to come by due to new sanctions by the U.S. government that prohibit their export to China. Part of the problem is that many of the H20 GPUs in China are already being used by DeepSeek's customers. The Information says the R1 model has been widely adopted by Chinese companies and government agencies, and most of them run it on H20 GPUs in the cloud. So there's no more capacity available for DeepSeek to train its latest model. It's said that the H20 GPU shortages are already causing problems with R1, limiting how it is used by Chinese firms. If the R2 model significantly improves on R1, it's expected that the demand for the model will increase beyond what Chinese cloud infrastructure providers can handle, according to staff interviewed by The Information. The H20 processor is comparable to the H100 GPU that Nvidia sells to western companies, but its bandwidth and connectivity had been throttled to meet earlier restrictions on the types of chips that could be exported to China. However, President Donald Trump's administration decided that even this scaled-down chip is too powerful to be shipped to its geopolitical rival, and promptly slapped new restrictions on the country in April, banning its export there. That decision has reportedly thrown a major spanner in the works of Chinese AI developers. While there are some domestic alternatives available, such as Huawei Technologies Co. Ltd.'s Ascend 910B chipset, these are even less powerful than the H20 and they lack support for Nvidia's CUDA software stack - a programming architecture that's used to optimize applications and AI models to run on Nvidia's GPUs. That's problematic because virtually all Chinese AI developers are thought to be using the CUDA software. The Information says DeepSeek's R1 and R2 models are also optimized for Nvidia's chips, and its inability to access them could prove to be a major setback in its efforts to keep pace with its U.S. rivals.

NVIDIA H20 Chip Shortage Delays DeepSeek R2 Launch | AIM

The launch of DeepSeek's upcoming model, R2, could face significant setbacks in China as US export restrictions choke the supply of NVIDIA's H20 chips, critical for running the company's AI models, reported The Information. R2, the successor to DeepSeek's widely used R1, has yet to receive a release date. The report added that CEO Liang Wenfeng is unsatisfied with its performance, and engineers continue to work on improvements before it is cleared for launch. Cloud providers that host and distribute DeepSeek's models warn that existing inventories of NVIDIA chips will likely fall short of meeting the demand R2 could generate, particularly if it performs better than current open-source alternatives. These concerns have intensified following the April ban on NVIDIA's H20 chip, which was specifically built for the Chinese market after earlier export restrictions barred the sale of more powerful Hopper series GPUs. During the recent earnings call, NVIDIA CFO Colette Kress said the company's outlook reflects a loss of approximately $8 billion in H20 revenue for the second quarter. R1 and R2 are tightly optimised to run on NVIDIA's architecture, making substitution with Chinese-developed chips difficult and inefficient. According to the report, employees at Chinese cloud companies said DeepSeek's models "are so completely optimised for NVIDIA's hardware and software" that deploying them on domestic alternatives is not viable at scale. Despite the ban, some Chinese companies have found a workaround to obtain NVIDIA hardware. According to The Wall Street Journal, engineers from Chinese AI companies are heading to Kuala Lumpur, Malaysia, with hard drives packed with instructions and data to train AI models. They then utilise the NVIDIA chips available at Malaysian data centres to train the model and return it to China. Meanwhile, to cope with chip shortages, some Chinese firms have resorted to using gaming GPUs like NVIDIA's RTX 5090 and 4090, which are also under export restrictions but easier to obtain through grey markets. DeepSeek, backed by hedge fund firm High-Flyer Capital Management, made headlines for training R1 with less compute than US competitors like OpenAI. In response to the surge in R1 usage, major Chinese tech firms, including ByteDance, Alibaba, and Tencent, placed $16 billion worth of orders for 1.2 million H20 chips in early 2025, according to SemiAnalysis estimates. That compares with the 1 million chips shipped to China by NVIDIA last year. Despite these efforts, the scalability of R2 in China could be limited. Companies outside China, not constrained by US chip curbs, may find it easier to deploy the model at full scale.

DeepSeek somehow acquires NVIDIA H100 AI GPUs, after US bans NVIDIA from selling chips to China

Chinese AI giant DeepSeek has somehow procured NVIDIA H100 AI GPUs, even after the US government banned NVIDIA from selling those AI chips to China. As an Amazon Associate, we earn from qualifying purchases. TweakTown may also earn commissions from other affiliate partners at no extra cost to you. Chinese AI giant DeepSeek is helping Chinese military and intelligence operators access NVIDIA H100 AI GPUs, even after the US government banned NVIDIA from handing the AI chips to China DeepSeek has been using shell companies operating in Southeast Asia to access high-end semiconductors that can't be shipped to China under tightened US export restrictions. A senior State Department official told Reuters in an interview: "We understand that DeepSeek has willingly provided and will likely continue to provide support to China's military and intelligence operations. This effort goes above and beyond open-source access to DeepSeek's AI models". The senior State Department official added that DeepSeek is sharing user information and statistics with China's surveillance networks. Chinese law requires companies operating in China to provide data to the Chinese government when requested, and the suggestions that DeepSeek is doing exactly that raises serious privacy concerns, among other concerns for the company and its tens of millions of daily users across the planet. Reuters reports that the senior State Department official said DeepSeek is using workarounds on the tightening US export restrictions due to Washington's worries that China could use the AI GPUs to advance China's military capabilities, or get an increased foothold in the AI race. The official added: "DeepSeek sought to use shell companies in Southeast Asia to evade export controls, and DeepSeek is seeking to access data centers in Southeast Asia to remotely access U.S. chips".

President Trump's AI chip export controls hurt DeepSeek's release of its next-gen R2 AI model

DeepSeek's next-gen R2 AI model launch stopped as CEO isn't satisfied with its performance, caused by its lack of NVIDIA AI GPUs getting into China. As an Amazon Associate, we earn from qualifying purchases. TweakTown may also earn commissions from other affiliate partners at no extra cost to you. DeepSeek was meant to unleash its next-gen AI model known as R2 in May, but the release has been pushed back since US export restrictions have made it much harder for the company to get R2 onto the market. In a new report from The Information, we're hearing that DeepSeek engineers have been working on refining the new R2 model until DeepSeek CEO Liang Wenfeng gives the green light for release. However, the US government has continued to tighten US export restrictions and it has had a negative impact on the release of DeepSeek's upcoming R2 model. The report says that the fast adoption of the Chinese company's new R2 model would overwhelm Chinese cloud providers, who are in dire need of NVIDIA's advanced AI chips in order to run the more powerful R2 models. DeepSeek has reportedly been in communication with some of these Chinese cloud companies, providing them with technical specifications to help their plans for hosting and distributing some of these models from their servers. Some of the Chinese cloud companies are using DeepSeek's current R1, with the majority of them running NVIDIA H20 AI GPUs, but with fresh restrictions handed down by the Trump administration back in April 2025, NVIDIA has been banned from selling its H20 chips to China. This is a major issue, as the H20 was the only AI accelerator the companies could legally export to China at the time.

DeepSeek R2 Launch Stalled as CEO Balks at Progress: Report

Its aim is to bring better coding and reason in languages beyond English Chinese AI startup DeepSeek has not yet determined the timing of the release of its R2 model as CEO Liang Wenfeng is not satisfied with its performance, The Information reported on Thursday, citing two people with knowledge of the situation. R2, a successor to DeepSeek's wildly popular R1 reasoning model, was planned for release in May with goals to produce better coding and reason in languages beyond English, Reuters reported earlier this year. Over the past several months, DeepSeek's engineers have been working to refine R2 until Liang gives the green light for release, according to The Information. However, a fast adoption of R2 could be difficult due to a shortage of Nvidia server chips in China as a result of US export regulations, the report said, citing employees of top Chinese cloud firms that offer DeepSeek's models to enterprise customers. A potential surge in demand for R2 would overwhelm Chinese cloud providers, who need advanced Nvidia chips to run AI models, the report said. DeepSeek did not immediately respond to a Reuters request for comment. DeepSeek has been in touch with some Chinese cloud companies, providing them with technical specifications to guide their plans for hosting and distributing the model from their servers, the report said. Among its cloud customers currently using R1, the majority are running the model with Nvidia's H20 chips, The Information said. Fresh export curbs imposed by the Trump administration in April have prevented Nvidia from selling in the Chinese market its H20 chips - the only AI processors it could legally export to the country at the time. © Thomson Reuters 2025

DeepSeek aids China's military and evaded export controls, US official says

A US official alleges Chinese AI firm DeepSeek supports China's military and intelligence operations and tried to bypass export controls using Southeast Asian shell companies. The firm reportedly accessed restricted Nvidia chips and shared user data with Beijing. While praised for advanced models, concerns persist over data privacy, export rule violations, and military links.AI firm DeepSeek is aiding China's military and intelligence operations, a senior U.S. official told Reuters, adding that the Chinese tech startup sought to use Southeast Asian shell companies to access high-end semiconductors that cannot be shipped to China under US rules. Hangzhou-based DeepSeek sent shockwaves through the technology world in January, claiming its artificial intelligence reasoning models were on par with or better than U.S. industry-leading models at a fraction of the cost. "We understand that DeepSeek has willingly provided and will likely continue to provide support to China's military and intelligence operations," a senior State Department official told Reuters in an interview. "This effort goes above and beyond open-source access to DeepSeek's AI models," the official said, speaking on condition of anonymity in order to speak about U.S. government information. The U.S. government's assessment of DeepSeek's activities and links to the Chinese government have not been previously reported and come amid a wide-scale U.S.-China trade war. Among the allegations, the official said DeepSeek is sharing user information and statistics with Beijing's surveillance apparatus. Chinese law requires companies operating in China to provide data to the government when requested. But the suggestion that DeepSeek is already doing so is likely to raise privacy and other concerns for the firm's tens of millions of daily global users. The US also maintains restrictions on companies it believes are linked to China's military-industrial complex. US lawmakers have previously said that DeepSeek, based on its privacy disclosure statements, transmits American users' data to China through "backend infrastructure" connected to China Mobile, a Chinese state-owned telecommunications giant. DeepSeek did not respond to questions about its privacy practices. The company is also referenced more than 150 times in procurement records for China's People's Liberation Army and other entities affiliated with the Chinese defense industrial base, said the official, adding that DeepSeek had provided technology services to PLA research institutions. Reuters could not independently verify the procurement data. The official also said the company was employing workarounds to U.S. export controls to gain access to advanced US-made chips. The US conclusions reflect a growing skepticism in Washington that the capabilities behind the rapid rise of one of China's flagship AI enterprises may have been exaggerated and relied heavily on U.S. technology. DeepSeek has access to "large volumes" of U.S. firm Nvidia's high-end H100 chips, said the official. Since 2022 those chips have been under US export restrictions due to Washington's concerns that China could use them to advance its military capabilities or jump ahead in the AI race. "DeepSeek sought to use shell companies in Southeast Asia to evade export controls, and DeepSeek is seeking to access data centers in Southeast Asia to remotely access US chips," the official said. The official declined to say if DeepSeek had successfully evaded export controls or offer further details about the shell companies. DeepSeek also did not respond to questions about its acquisition of Nvidia chips or the alleged use of shell companies. When asked if the US would implement further export controls or sanctions against DeepSeek, the official said the department had "nothing to announce at this time." China's foreign ministry and commerce ministry did not respond to a Reuters request for comment. "We do not support parties that have violated US export controls or are on the US entity lists," an Nvidia spokesman said in a prepared statement, adding that "with the current export controls, we are effectively out of the China data center market, which is now served only by competitors such as Huawei." Access to restricted chips DeepSeek has said two of its AI models that Silicon Valley executives and U.S. tech company engineers have showered with praise - DeepSeek-V3 and DeepSeek-R1 - are on par with OpenAI and Meta's most advanced models. AI experts, however, have expressed skepticism, arguing the true costs of training the models were likely much higher than the $5.58 million the startup said was spent on computing power. Reuters has previously reported that US officials were investigating whether DeepSeek had access to restricted AI chips. DeepSeek has H100 chips that it procured after the US banned Nvidia from selling those chips to China, three sources familiar with the matter told Reuters, adding that the number was far smaller than the 50,000 H100s that the CEO of another AI startup had claimed DeepSeek possesses in a January interview with CNBC. Reuters was unable to verify the number of H100 chips DeepSeek has. "Our review indicates that DeepSeek used lawfully acquired H800 products, not H100," an Nvidia spokesman said, responding to a Reuters query about DeepSeek's alleged usage of H100 chips. In February, Singapore charged three men with fraud in a case domestic media have linked to the movement of Nvidia's advanced chips from the city state to DeepSeek. China has also been suspected of finding ways to use advanced US chips remotely. While importing advanced Nvidia chips into China without a license violates US export rules, Chinese companies are still allowed to access those same chips remotely in data centers in non-restricted countries. The exceptions are when a Chinese company is on a US trade blacklist or the chip exporter has knowledge that the Chinese firm is using its chips to help develop weapons of mass destruction. US officials have not placed DeepSeek on any US trade blacklists yet and have not alleged that Nvidia had any knowledge of DeepSeek's work with the Chinese military. Malaysia's trade ministry said last week that it was investigating whether an unnamed Chinese company in the country was using servers equipped with Nvidia chips for large language model training and that it was examining whether any domestic law or regulation had been breached.

China's DeepSeek Is Reportedly Powering Military Operations With "Illegally Sourced" NVIDIA H100 AI Accelerators

Well, the US export controls haven't put a big dent in DeepSeek's AI ambitions, as the Chinese firm is said to have access to a large arsenal of NVIDIA's high-end chips. China's DeepSeek is said to be the largest AI firm in the nation, similar to what OpenAI is doing in the US. DeepSeek made headlines with the release of its R1 model, which was said to employ far less computational power than what Big Tech currently utilizes, and this led them to see market attention to unexpected levels. Now, according to a report by Reuters, it is claimed that DeepSeek is now working with the Chinese military in intelligence operations, and is providing information it receives from the millions of users abroad, including data from firms like Amazon, Google, and Microsoft, which offer DeepSeek's LLMs to customers. The report, citing a senior official in the US administration, claims that DeepSeek is transmitting American data to Chinese entities through "backend infrastructure", and the Chinese AI firm is also mentioned more than 150 times in procurement records for the military, showing that the company has deep-rooted connections with state-run organizations. The US is yet to implement a restriction on the usage of China's DeepSeek in the nation, but given the firm's involvement in China's military, the Trump administration might have a solid reason for a potential ban, but this isn't certain for now. Not just links with the military, but DeepSeek is said to be in blatant violation of US export controls, since the firm reportedly has "shell companies" in Southeast Asia, where it is accessing data centers to use NVIDIA's high-end AI chips remotely. DeepSeek is also said to have used NVIDIA's high-end H100 AI chips to aid in military operations with China, showing that despite US export controls, Chinese organizations have found solid workarounds to fulfill their AI ambitions. Considering the past track record, DeepSeek is likely to source high-end AI chips from Malaysia or Singapore, since these states are known for providing China with AI computing. DeepSeek's AI efforts in China are now pushing for state-level influence, and with that, it would be interesting to see whether the Trump administration will take any action on the organization since, ultimately, it will evolve into a matter of national security.

President Trump's AI Chip Export Controls Have Forced China's DeepSeek to Derail the Release of Their Next Big "R2" AI Model

DeepSeek is having trouble accessing NVIDIA's cutting-edge AI chips, as a new report says that US export controls are delaying China's AI ambitions. Since President Trump took office, a key focus has been on ensuring that the US stays ahead in the AI chip race, and that motive led the administration to promptly impose export controls on some of NVIDIA's best-selling chips in China, the H20 AI accelerator. By essentially being stripped away from computing power, DeepSeek is now claimed to have been facing troubles with its next R2 AI model, since a report by The Information claims that CEO Liang Wenfeng is not happy with the performance of the LLM, and Chinese CSPs cannot readily adopt the R2 model, due to lack of NVIDIA chips. Despite China's role in getting access to AI chips through various "workarounds", there's no doubt that the recent round of export controls has restricted the flow of high-end accelerators to the mainland, which has bothered DeepSeek. The company made huge strides with its previous model, the DeepSeek R1, which erased billions in market cap of NVIDIA after it was rumored that the company utilized confined financial resources, so there was a lot of hype towards DeepSeek's next model, presumably the R2. The report claims that DeepSeek currently doesn't have a definite time for when the R2 AI model could be pushed out in the Chinese markets, since domestic CSPs are finding it difficult to accumulate enough computing resources to power the upcoming model. It is claimed that a significant stockpile of NVIDIA's H20 AI GPUs in the domestic market is currently occupied with cloud customers running DeepSeek R1, and with the lack of accelerators, deploying R2 becomes even more difficult. It's safe to say that US export controls have done their job limiting China's AI expansion. In a previous report, it was claimed that DeepSeek is involved with the Chinese military, and has access to AI chips through "shell companies" in Asia, which shows that the Chinese AI firm is trying all means to get its hands on NVIDIA's high-end AI chips, but is apparently failing to do so. NVIDIA has yet to introduce a solution for domestic markets, and with alternatives like Huawei, DeepSeek cannot rely solely on them for mass deployment.

Nvidia's Best Chips May Be Powering China's Military -- Via DeepSeek - NVIDIA (NASDAQ:NVDA)

A senior U.S. official revealed on Monday that the Chinese AI company DeepSeek is supporting the Asian nation's military and intelligence agencies and found ways around U.S. export restrictions on advanced semiconductor chips. The Details: DeepSeek provided AI technology that uses advanced U.S. chips to China's military, despite Washington's efforts to prevent such tech from being accessible to China, according to a Reuters report. Read Next: AST SpaceMobile Stock Downgraded, Rocket Lab Prepares Electron Launch: Space Stock Countdown "We understand that DeepSeek has willingly provided and will likely continue to provide support to China's military and intelligence operations," a senior State Department official told Reuters in an interview. The official said that DeepSeek provides Beijing's surveillance operators with user information and statistics. "This effort goes above and beyond open-source access to DeepSeek's AI models," the anonymous official said. The same U.S.official told Reuters that DeepSeek was using "workarounds" to gain access to advanced chips from the U.S. and that the company has access to "large volumes" of NVIDIA Corp.'s NVDA H100 chips. Three separate sources familiar with the matter also told Reuters that DeepSeek has Nvidia's H100 chips that it obtained after the U.S. banned Nvidia from selling those chips to China "Our review indicates that DeepSeek used lawfully acquired H800 products, not H100," an Nvidia spokesman said, responding to Reuters about DeepSeek's alleged usage of H100 chips. DeepSeek has not publicly responded to these allegations. Read Next: UnitedHealth, CVS Among Major Insurers To Fast-Track Prior Authorizations: Will It Cut Profits Even More? Image: Shutterstock NVDANVIDIA Corp$144.080.16%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock RankingsEdge RankingsMomentum69.79Growth98.65QualityNot AvailableValue7.25Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

DeepSeek aids China's military and evaded export controls, U.S. official says

AI firm DeepSeek is aiding China's military and intelligence operations, a senior U.S. official said, adding that the Chinese tech startup sought to use Southeast Asian shell companies to access high-end semiconductors that cannot be shipped to China under U.S. rules. The U.S. conclusions reflect a growing conviction in Washington that the capabilities behind the rapid rise of one of China's flagship AI enterprises may have been exaggerated and relied heavily on U.S. technology. Hangzhou-based DeepSeek sent shockwaves through the technology world in January, saying its artificial intelligence reasoning models were on par with or better than U.S. industry-leading models at a fraction of the cost.

DeepSeek aids China's military and evaded export controls, U.S. official says

WASHINGTON/SAN FRANCISCO -- AI firm DeepSeek is aiding China's military and intelligence operations, a senior U.S. official told Reuters, adding that the Chinese tech startup sought to use Southeast Asian shell companies to access high-end semiconductors that cannot be shipped to China under U.S. rules. The U.S. conclusions reflect a growing conviction in Washington that the capabilities behind the rapid rise of one of China's flagship AI enterprises may have been exaggerated and relied heavily on U.S. technology. Hangzhou-based DeepSeek sent shockwaves through the technology world in January, saying its artificial intelligence reasoning models were on par with or better than U.S. industry-leading models at a fraction of the cost. "We understand that DeepSeek has willingly provided and will likely continue to provide support to China's military and intelligence operations," a senior State Department official told Reuters in an interview. "This effort goes above and beyond open-source access to DeepSeek's AI models," the official said, speaking on condition of anonymity in order to speak about U.S. government information. The U.S. government's assessment of DeepSeek's activities and links to the Chinese government have not been previously reported and come amid a wide-scale U.S.-China trade war. Among the allegations, the official said DeepSeek is sharing user information and statistics with Beijing's surveillance apparatus. The big three U.S. cloud providers Amazon, Microsoft and Alphabet's Google offer DeepSeek to customers. Chinese law requires companies operating in China to provide data to the government when requested. But the suggestion that DeepSeek is already doing so is likely to raise privacy and other concerns for the firm's tens of millions of daily global users. The U.S. also maintains restrictions on companies it believes are linked to China's military-industrial complex. U.S. lawmakers have previously said that DeepSeek, based on its privacy disclosure statements, transmits American users' data to China through "backend infrastructure" connected to China Mobile, a Chinese state-owned telecommunications giant. DeepSeek did not respond to questions about its privacy practices. The company is also referenced more than 150 times in procurement records for China's People's Liberation Army and other entities affiliated with the Chinese defense industrial base, said the official, adding that DeepSeek had provided technology services to PLA research institutions. Reuters could not independently verify the procurement data. The official also said the company was employing workarounds to U.S. export controls to gain access to advanced U.S.-made chips. DeepSeek has access to "large volumes" of U.S. firm Nvidia's NVDA.O high-end H100 chips, said the official. Since 2022 those chips have been under U.S. export restrictions due to Washington's concerns that China could use them to advance its military capabilities or jump ahead in the AI race. "DeepSeek sought to use shell companies in Southeast Asia to evade export controls, and DeepSeek is seeking to access data centers in Southeast Asia to remotely access U.S. chips," the official said. The official declined to say if DeepSeek had successfully evaded export controls or offer further details about the shell companies. DeepSeek also did not respond to questions about its acquisition of Nvidia chips or the alleged use of shell companies. When asked if the U.S. would implement further export controls or sanctions against DeepSeek, the official said the department had "nothing to announce at this time." China's foreign ministry and commerce ministry did not respond to a Reuters request for comment. "We do not support parties that have violated U.S. export controls or are on the U.S. entity lists," an Nvidia spokesman said in a prepared statement, adding that "with the current export controls, we are effectively out of the China data center market, which is now served only by competitors such as Huawei." Access to restricted chips DeepSeek has said two of its AI models that Silicon Valley executives and U.S. tech company engineers have showered with praise. DeepSeek-V3 and DeepSeek-R1, are on par with OpenAI and Meta's META.O most advanced models. AI experts, however, have expressed skepticism, arguing the true costs of training the models were likely much higher than the $5.58 million the startup said was spent on computing power. Reuters has previously reported that U.S. officials were investigating whether DeepSeek had access to restricted AI chips. DeepSeek has H100 chips that it procured after the U.S. banned Nvidia from selling those chips to China, three sources familiar with the matter told Reuters, adding that the number was far smaller than the 50,000 H100s that the CEO of another AI startup had claimed DeepSeek possesses in a January interview with CNBC. Reuters was unable to verify the number of H100 chips DeepSeek has. "Our review indicates that DeepSeek used lawfully acquired H800 products, not H100," an Nvidia spokesman said, responding to a Reuters query about DeepSeek's alleged usage of H100 chips. In February, Singapore charged three men with fraud in a case domestic media have linked to the movement of Nvidia's advanced chips from the city state to DeepSeek. China has also been suspected of finding ways to use advanced U.S. chips remotely. While importing advanced Nvidia chips into China without a license violates U.S. export rules, Chinese companies are still allowed to access those same chips remotely in data centers in non-restricted countries. The exceptions are when a Chinese company is on a U.S. trade blacklist, or the chip exporter has knowledge that the Chinese firm is using its chips to help develop weapons of mass destruction. U.S. officials have not placed DeepSeek on any U.S. trade blacklists yet and have not alleged that Nvidia had any knowledge of DeepSeek's work with the Chinese military. Malaysia's trade ministry said last week that it was investigating whether an unnamed Chinese company in the country was using servers equipped with Nvidia chips for large language model training and that it was examining whether any domestic law or regulation had been breached. (Reporting by Michael Martina in Washington and Stephen Nellis in San Francisco; Additional reporting by Fanny Potkin in Singapore; Editing by Don Durfee, Kenneth Li, Cynthia Osterman, Deepa Babington, Himani Sarkar and Emelia Sithole-Matarise)

Exclusive-DeepSeek aids China's military and evaded export controls, US official says

WASHINGTON/SAN FRANCISCO (Reuters) -AI firm DeepSeek is aiding China's military and intelligence operations, a senior U.S. official told Reuters, adding that the Chinese tech startup sought to use Southeast Asian shell companies to access high-end semiconductors that cannot be shipped to China under U.S. rules. The U.S. conclusions reflect a growing conviction in Washington that the capabilities behind the rapid rise of one of China's flagship AI enterprises may have been exaggerated and relied heavily on U.S. technology. Hangzhou-based DeepSeek sent shockwaves through the technology world in January, saying its artificial intelligence reasoning models were on par with or better than U.S. industry-leading models at a fraction of the cost. "We understand that DeepSeek has willingly provided and will likely continue to provide support to China's military and intelligence operations," a senior State Department official told Reuters in an interview. "This effort goes above and beyond open-source access to DeepSeek's AI models," the official said, speaking on condition of anonymity in order to speak about U.S. government information. The U.S. government's assessment of DeepSeek's activities and links to the Chinese government have not been previously reported and come amid a wide-scale U.S.-China trade war. Among the allegations, the official said DeepSeek is sharing user information and statistics with Beijing's surveillance apparatus. The big three U.S. cloud providers Amazon, Microsoft and Alphabet's Google offer DeepSeek to customers. Chinese law requires companies operating in China to provide data to the government when requested. But the suggestion that DeepSeek is already doing so is likely to raise privacy and other concerns for the firm's tens of millions of daily global users. The U.S. also maintains restrictions on companies it believes are linked to China's military-industrial complex. U.S. lawmakers have previously said that DeepSeek, based on its privacy disclosure statements, transmits American users' data to China through "backend infrastructure" connected to China Mobile, a Chinese state-owned telecommunications giant. DeepSeek did not respond to questions about its privacy practices. The company is also referenced more than 150 times in procurement records for China's People's Liberation Army and other entities affiliated with the Chinese defense industrial base, said the official, adding that DeepSeek had provided technology services to PLA research institutions. Reuters could not independently verify the procurement data. The official also said the company was employing workarounds to U.S. export controls to gain access to advanced U.S.-made chips. DeepSeek has access to "large volumes" of U.S. firm Nvidia's high-end H100 chips, said the official. Since 2022 those chips have been under U.S. export restrictions due to Washington's concerns that China could use them to advance its military capabilities or jump ahead in the AI race. "DeepSeek sought to use shell companies in Southeast Asia to evade export controls, and DeepSeek is seeking to access data centers in Southeast Asia to remotely access U.S. chips," the official said. The official declined to say if DeepSeek had successfully evaded export controls or offer further details about the shell companies. DeepSeek also did not respond to questions about its acquisition of Nvidia chips or the alleged use of shell companies. When asked if the U.S. would implement further export controls or sanctions against DeepSeek, the official said the department had "nothing to announce at this time." China's foreign ministry and commerce ministry did not respond to a Reuters request for comment. "We do not support parties that have violated U.S. export controls or are on the U.S. entity lists," an Nvidia spokesman said in a prepared statement, adding that "with the current export controls, we are effectively out of the China data center market, which is now served only by competitors such as Huawei." ACCESS TO RESTRICTED CHIPS DeepSeek has said two of its AI models that Silicon Valley executives and U.S. tech company engineers have showered with praise - DeepSeek-V3 and DeepSeek-R1 - are on par with OpenAI and Meta's most advanced models. AI experts, however, have expressed skepticism, arguing the true costs of training the models were likely much higher than the $5.58 million the startup said was spent on computing power. Reuters has previously reported that U.S. officials were investigating whether DeepSeek had access to restricted AI chips. DeepSeek has H100 chips that it procured after the U.S. banned Nvidia from selling those chips to China, three sources familiar with the matter told Reuters, adding that the number was far smaller than the 50,000 H100s that the CEO of another AI startup had claimed DeepSeek possesses in a January interview with CNBC. Reuters was unable to verify the number of H100 chips DeepSeek has. "Our review indicates that DeepSeek used lawfully acquired H800 products, not H100," an Nvidia spokesman said, responding to a Reuters query about DeepSeek's alleged usage of H100 chips. In February, Singapore charged three men with fraud in a case domestic media have linked to the movement of Nvidia's advanced chips from the city state to DeepSeek. China has also been suspected of finding ways to use advanced U.S. chips remotely. While importing advanced Nvidia chips into China without a license violates U.S. export rules, Chinese companies are still allowed to access those same chips remotely in data centers in non-restricted countries. The exceptions are when a Chinese company is on a U.S. trade blacklist or the chip exporter has knowledge that the Chinese firm is using its chips to help develop weapons of mass destruction. U.S. officials have not placed DeepSeek on any U.S. trade blacklists yet and have not alleged that Nvidia had any knowledge of DeepSeek's work with the Chinese military. Malaysia's trade ministry said last week that it was investigating whether an unnamed Chinese company in the country was using servers equipped with Nvidia chips for large language model training and that it was examining whether any domestic law or regulation had been breached. (Reporting by Michael Martina in Washington and Stephen Nellis in San Francisco; Additional reporting by Fanny Potkin in Singapore; Editing by Don Durfee, Kenneth Li, Cynthia Osterman, Deepa Babington, Himani Sarkar and Emelia Sithole-Matarise)