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."
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.

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Reuters

28 minutes ago

• Reuters

Putin says Russia is ramping up production of Oreshnik missile

MOSCOW, June 23 (Reuters) - Russian President Vladimir Putin said on Monday that Russia is stepping up production of its Oreshnik intermediate-range hypersonic missile, which it launched for the first time against Ukraine last November. "Serial production of the latest Oreshnik medium-range missile system is under way," Putin told a graduating class of military cadets in televised comments. The system has "proven itself very well in combat conditions," he added. Russia first used the Oreshnik (Hazel tree) against Ukraine on November 21, when Putin said it had fired the missile at a defence enterprise in the city of Dnipro. He said he had authorised the strike in direct response to Ukraine's first use of U.S.-made ballistic missiles and British-made cruise missiles to hit Russian territory, after Western countries granted their permission. Putin subsequently threatened further strikes, including against "decision-making centres" in Kyiv, if Ukraine kept attacking Russia with long-range Western weapons. Intermediate missiles have a range of up to 5,500 km (3,415 miles), which would enable them to strike anywhere in Europe or the western United States from Russia. Putin has boasted that the Oreshnik is impossible to intercept and has destructive power comparable to a nuclear weapon, although some Western experts have cast doubt on those claims. In December, a U.S. official said the weapon was not seen as a game-changer on the battlefield, calling it experimental in nature and saying Russia likely possessed only a handful. Putin said late last year that Russia could also deploy Oreshniks on the territory of its ally Belarus in the second half of 2025. Belarus shares borders with NATO members Poland, Latvia and Lithuania.

The Independent

28 minutes ago

• The Independent

The ‘inappropriate' post over Iran that led the LA County Sheriff's Department to apologize

The Los Angeles County Sheriff's Department (LASD) apologized for an "offensive and inappropriate" social media post regarding recent U.S. strikes in Iran. The initial post, published hours after U.S. bombings, referenced "victims and families impacted" despite no reported fatalities. The LASD faced significant public backlash, with social media users criticizing the statement as a "slap in the face" to the U.S. military. The department first edited the post, then issued a formal apology, stating the original message was "unacceptable, made in error, and does not reflect the views of Sheriff Robert G. Luna or the Department." The LASD is conducting an internal review into the post's creation and publication, and is reviewing its social media oversight protocols.

Leader Live

30 minutes ago

• Leader Live

Russian attacks on Ukraine kill at least 10 people, most of them in Kyiv

Russia fired 352 drones and decoys overnight, as well as 11 ballistic missiles and five cruise missiles, Ukraine's air force said. Air defences intercepted or jammed 339 drones and 15 missiles before they could reach their targets, a statement said. The strikes came nearly a week after a Russian attack killed 28 people in Kyiv, 23 of them in a residential building that collapsed after a direct missile hit. Russian forces for several months have been trying to drive deeper into Ukraine as part of a summer push along the 620-mile front line, though the Institute for the Study of War said progress has failed to make significant gains. 'Russian forces are largely relying on poorly trained infantry to make gains in the face of Ukraine's drone-based defence,' the Washington-based think tank said late Sunday. Russia also has pounded civilian areas with long-range strikes in an apparent attempt to weaken Ukrainian morale. Ukrainian president Volodymyr Zelensky said preliminary data indicated that Russian forces used North Korean missiles in the Kyiv strike. He called Russia, North Korea and Iran, which has provided drones to Russia, a 'coalition of murderers'. Mr Zelensky said Ukraine's defence and new ways to pressure Russia will be the two main topics in his visit to the United Kingdom on Monday. Mr Zelensky is set to meet with Prime Minister Sir Keir Starmer ahead of this week's Nato summit in The Hague. French foreign minister Jean-Noel Barrot said the latest strikes demonstrated Russia's 'unlimited cruelty' by deliberately aiming at civilian targets, and promised more European sanctions on Moscow. Drones and missiles hit residential areas, hospitals and sports infrastructure in numerous districts across Kyiv, emergency services said. The most severe damage was in Shevchenkivskyi district, where a section of a five-story apartment building collapsed. Six people were killed in the district, Kyiv mayor Vitali Klitschko said. Ten others, including a pregnant woman, were rescued from a nearby high-rise that also sustained heavy damage. Dozens of vehicles were burned or mangled by flying debris. The Russian attack also damaged the entrance to the Sviatoshyn subway station in Kyiv, slightly injuring two people, said Timur Tkachenko, the head of Kyiv's military administration. He said more than 30 people were injured across the city. Underground subway stations have served as shelters for those seeking protection from aerial attacks. During almost nightly strikes, stations across Kyiv are often filled with people waiting out the danger. Elsewhere in Ukraine, a Russian short-range drone attack killed two people and wounded 10 more in the Chernihiv region late on Sunday, authorities said. Three children were among the wounded, according to the regional administration head, Viacheslav Chaus. Another person was killed and eight wounded overnight in the city of Bila Tserkva, around 53 miles south west of the capital. Meanwhile, Russia's Defence Ministry said its air defences shot down 23 Ukrainian drones overnight into Monday.