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.