AI firm DeepSeek, based in Hangzhou, China, is allegedly assisting in the military and intelligence operations of the Chinese government, according to a senior U.S. official. This involves the utilization of Southeast Asian shell companies to obtain high-grade semiconductors, which are prohibited from being shipped to China under U.S. regulations.
Reports indicate that DeepSeek sent a ripple through the tech industry earlier this year by claiming that its artificial intelligence reasoning models were at par, or even superior to, leading U.S. models and, surprisingly, at a fraction of the cost. The official, who chose to remain anonymous due to the sensitive nature of the information, stated, “DeepSeek has willingly provided and will likely continue to provide support to China’s military and intelligence operations.”
This development follows earlier reports that DeepSeek is sharing user information and statistics with Beijing’s surveillance machinery. The U.S. maintains restrictions on companies it believes are connected with China’s military-industrial complex. DeepSeek is offered by the top three U.S. cloud providers: Amazon, Microsoft, and Alphabet’s Google.
Chinese law requires companies operating within China to provide data to the government upon request. DeepSeek’s alleged compliance with this request raises important questions about privacy for its tens of millions of daily global users. However, the company did not respond to questions about its privacy practices.
This raises important questions about DeepSeek’s acquisition of U.S. firm Nvidia’s high-end H100 chips. According to reliable sources, these chips have been under U.S. export restrictions since 2022 due to concerns that China could use them to enhance its military capabilities or gain an upper hand in the AI race. Yet, DeepSeek reportedly maintains access to large volumes of these chips.
The evidence suggests that DeepSeek has been using Southeast Asian shell companies to bypass export controls and even seeking to access data centers in the same region to remotely access U.S. chips. However, further details about the shell companies or the success of these alleged evasions remain undisclosed. Nvidia has stated that it does not support parties on the U.S. entity lists or those that have violated U.S. export controls.
Concerns have been raised about DeepSeek’s AI models, which have received praise from Silicon Valley executives. AI experts have expressed doubt about the stated costs of training these models, suggesting that the actual expenditure may be considerably higher than the reported $5.58 million. These suspicions have led to an investigation into whether DeepSeek had access to restricted AI chips.
The situation with DeepSeek continues to develop, raising important questions about the intersection of technology, privacy, and national security. We will continue to provide updates as more information becomes available.