US flags DeepSeek, Chinese firms over AI theft allegations

The US State Department has ordered a global push to bring attention to what it says are widespread efforts by Chinese companies, including AI startup DeepSeek, to steal intellectual property from US artificial intelligence labs, according to a diplomatic cable seen by Reuters.

The cable, dated Friday and sent to diplomatic and consular posts around the world, instructs diplomatic staff to speak to their foreign counterparts about "concerns over adversaries' extraction and distillation of US AI models".

"A separate demarche request and message has been sent to Beijing for raising with China," the document states.

Distillation is the process of training smaller AI models using output from larger, more expensive ones as part of an effort to lower the costs of training a powerful new AI tool.

This week, the White House made similar accusations. The State Department did not immediately respond to a request for comment.

OpenAI has warned US lawmakers that DeepSeek was targeting the ChatGPT maker and the nation's leading AI companies to replicate models and use them for its own training.

China rejects accusations

The Chinese Embassy in Washington on Friday reiterated its stance that the accusations are baseless.

"The allegations that Chinese entities are stealing American AI intellectual property are groundless and are deliberate attacks on China's development and progress in the AI industry," it said in a statement to Reuters.

DeepSeek, whose low-cost AI model stunned the world last year, on Friday launched a preview of a highly anticipated new model, called the V4, adapted for Huawei chip technology, underlining China's growing autonomy in the sector.