• U.S. lawmakers are urging the Pentagon to designate DeepSeek as a "Chinese military company," citing alleged support for China's military and intelligence operations.
  • Federal and state entities have already begun banning DeepSeek on government networks, with the White House conducting a national-security review of its AI model.
  • The move reflects broader U.S.-China tech tensions, potentially accelerating a bifurcation of global AI ecosystems and impacting DeepSeek's access to U.S. technology and markets.

In a significant escalation of U.S.-China tech tensions, members of Congress have pressed the Department of Defense to formally add DeepSeek, a Chinese artificial intelligence startup, to the Pentagon's list of "Chinese military companies operating in the United States." According to people familiar with the matter, this push follows detailed allegations that DeepSeek has supported People's Liberation Army research, battlefield simulations, and other military-linked projects, while using shell companies to access restricted U.S. chips in violation of export controls.

Efforts to restrict DeepSeek have already gained momentum across government agencies. The Defense Information Systems Agency blocked it on Pentagon IT systems, and the U.S. Navy prohibited any use, with several states like New York and Virginia following suit by banning it on state devices and networks. "This is a five-alarm national security fire," one lawmaker said, arguing that the AI startup poses a data-security risk to U.S. users by potentially sharing sensitive information with Chinese security services.

DeepSeek, founded in July 2023 and owned by High-Flyer, a hedge fund based in Hangzhou, quickly rose to prominence with its consumer app becoming the most downloaded in the United States in late January. Its R1 model launch was so impactful that Nvidia (NVDA) briefly lost over $600 billion in market value amid fears about shifts in AI compute demand. The company provides frontier-level AI models that are open-sourced and integrated into cloud platforms from Amazon (AMZN), Microsoft (MSFT), Google (GOOGL), Huawei, and Alibaba (002502.SZ), enabling global developers to build on its technology.

Industry insiders note that DeepSeek's rapid ascent illustrates China's growing ability to produce world-class foundation models, challenging U.S. and Western labs. However, this has spotlighted a broader "dual-use" AI trend, where civilian startups offer capabilities easily adapted for military purposes. Cloud providers continue to offer DeepSeek models in ways they claim do not transfer data back to China, creating a commercial-security paradox for enterprises weighing cutting-edge capabilities against regulatory risks.

Without a formal Pentagon listing, DeepSeek could face escalating restrictions, including procurement blacklists and potential sanctions under proposed U.S.-China AI decoupling legislation. Analysts warn that such actions might cut off DeepSeek from advanced U.S. chips and global capital, accelerating a split in global AI ecosystems. In response, China may double down on indigenous AI chips and cloud infrastructure to support firms like DeepSeek, according to experts monitoring the situation.

Attempts to reach DeepSeek for comment were unsuccessful, but sources indicate the company has maintained that its operations are purely commercial. The White House National Security Council's ongoing review could shape future policy, with implications for other Chinese tech firms under scrutiny for defense links. As one analyst put it, "This isn't just about one company—it's part of a systematic review of dual-use Chinese tech players, reflecting AI's strategic importance akin to traditional defense hardware."

Correction: An earlier version of this article misstated the timing of DeepSeek's app popularity; it peaked in late January, not early February.