Chinese AI Firm DeepSeek Accused of Aiding Military and Evading U.S. Export Controls

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.

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

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.

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

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)