Description: Several media sources citing unnamed US defense officials have stated that Chinese AI startup company DeepSeek, had used their access to advanced chips manufactured by the US Nvidia to develop large language model training programs in cooperation with the Chinese Liberation Army (PLA) and other intelligence services. DeepSeek was launched in Jan 2025 when it disrupted the AI markets claiming it was on par with advanced AI programs developed by OpenAI or Meta for much lower costs. South Korea earlier this year, banned the usage of the app on a national level citing severe violations in their national privacy policy acts while Malaysia has recently reported that it was investigating the outreach of DeepSeek’s capabilities within their digital infrastructure. The Hangzhou- based company used shell companies throughout eastern and central Asia to circumvent the US ban imposed on Nvidia for access to its H100 microchips. DeepSeek was reportedly channeling large amounts of data to a Chinese state – owned telecom company called China Mobile which later disseminated that information to the Chinese military and intelligence services. DeepSeek still remains unsanctioned by the US Treasury Department amid an ongoing trade war between China and the US.
Impact: DeepSeek’s digital infiltration and outreach was suspected to have been large ever since its launch on the market and the company’s ties to the Chinese government was never disputed. The company’s constant pursuit of finding ways to access US – made microchips explains the close interconnectivity the rival US and Chinese economies have and outlines the reasons behind their ongoing trade war. DeepSeek’s access to personal data is reportedly constantly increasing which allows China to have digital access supremacy which may impact the ongoing trade ceasefire between the two countries. The US has to carefully maneuver around China’s monopolization of access and development of rare earth elements, crucial for developing and manufacturing microchips, since China is evidently pressing towards establishing an autonomous manufacturing capabilities using US trade secrets. By not sanctioning the usage of DeepSeek, the US further compromise their position both on the global AI development market and the ongoing trade negotiations while putting China in a severely advantageous position.