A senior US official has accused DeepSeek of supporting China’s military and intelligence operations.

The official told Reuters that DeepSeek uses shell companies in Southeast Asia to obtain restricted US-made semiconductors.

The company, based in Hangzhou, has reportedly provided user data to Beijing’s surveillance systems and collaborated with the People’s Liberation Army (PLA).

Procurement records show over 150 mentions of DeepSeek in connection with PLA research institutions, though Reuters could not verify this.

The official also alleged that DeepSeek acquired Nvidia’s H100 chips, which are banned for export to China, by bypassing controls through Southeast Asian data centers.

Nvidia said DeepSeek likely used the H800 version instead and denied violating US export rules.

DeepSeek has not responded to inquiries.

.source-ref{font-size:0.85em;color:#666;display:block;margin-top:1em;}a.ask-tia-citation-link:hover{color:#11628d !important;background:#e9f6f5 !important;border-color:#11628d !important;text-decoration:none !important;}@media only screen and (min-width:768px){a.ask-tia-citation-link{font-size:11px !important;}}

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Chinese tech sanctions evasion follows established patterns

DeepSeek’s alleged use of Southeast Asian shell companies to access restricted U.S. chips mirrors tactics previously employed by other major Chinese tech firms.

ZTE Corporation was fined a record $1.2 billion in 2017 for systematically evading U.S. sanctions, after investigations revealed the company had made 283 shipments of controlled technology to North Korea and conducted business with Iran1.

Similarly, ZTE was caught planning to use shell companies specifically to circumvent U.S. export controls, according to internal documents published by the Bureau of Industry and Security2.

The recent investigation in Malaysia examining whether Chinese companies are using servers with Nvidia chips for AI model training demonstrates how export control evasion continues to evolve across Southeast Asian jurisdictions.

This recurring pattern suggests that despite strengthening export controls, determined entities can find creative workarounds, particularly when accessing advanced AI hardware represents a strategic priority.

2️⃣ AI has become central to military intelligence competition

The DeepSeek allegations highlight how generative AI has become a critical battleground in military and intelligence capabilities between major powers.

China’s People’s Liberation Army is actively exploring generative AI for processing intelligence data, generating reports, and supporting military decision-making processes3.

The PLA has been adapting both foreign and domestic large language models for military applications, focusing on improving speed and accuracy of intelligence tasks while reducing operational costs3.

DeepSeek’s alleged support for military operations, including reported procurement connections to China’s defense industrial base, demonstrates how the lines between commercial AI development and national security applications are increasingly blurred.

This development reflects a broader trend where advanced AI capabilities are no longer just commercial assets but strategic resources with significant implications for military competition.

3️⃣ Western cloud providers face new challenges with Chinese AI models

The article’s revelation that all three major U.S. cloud providers—Amazon, Microsoft, and Google—offer DeepSeek to their customers raises significant questions about technology supply chains.

DeepSeek allegedly shares user information with Beijing’s surveillance apparatus, potentially exposing data from tens of millions of global users who may be unaware of these practices.

This creates a complex dilemma for Western cloud providers who must balance offering competitive AI solutions with ensuring user privacy and compliance with increasingly complex regulatory requirements.

As Chinese AI models like those from DeepSeek, Alibaba Cloud, and Zhipu continue to advance technically while maintaining competitive pricing advantages4, Western companies face increasingly difficult decisions about which technologies to integrate into their offerings.

Recent DeepSeek developments

……