US diplomacy is entering a new phase of offensive against Chinese artificial intelligence leaders. The State Department has issued global guidelines to its outposts, ordering them to warn foreign governments about the practices of companies such as DeepSeek, Moonshot AI and MiniMax. The crux of the dispute is no longer just access to processors, but the process of so-called distillation, which Washington explicitly calls the theft of American technological thought.
From a business perspective, distillation is a tempting shortcut. It allows smaller, cheaper-to-operate models to be trained on the results generated by powerful systems such as those from OpenAI. For Chinese startups, it’s a way to erode the US advantage at a fraction of the research cost. However, according to the US administration, this process not only copies intellectual architecture, but is done without authorisation, hitting Silicon Valley’s commercial foundations.
DeepSeek’s situation is key here. The startup, which recently electrified the market with its V3 model, has just unveiled the V4 version, optimised for Huawei hardware. This is a clear signal of building an independent ecosystem that challenges the hegemony of Nvidia and Microsoft. While DeepSeek has consistently denied using synthetic data from OpenAI, US lawmakers have received reports suggesting the opposite: deliberately replicating the behaviour of models in order to clone them.
Washington alerts that ‘distilled’ models often lack built-in fuses and controls, making them unpredictable for corporate use. At the same time, many Western institutions are already banning the use of DeepSeek tools, citing data privacy concerns.
The timing of this escalation is no coincidence. The escalation in rhetoric comes just weeks before President Donald Trump’s planned visit to Beijing. The dispute over AI intellectual property becomes a bargaining chip in a broader technology war, which, after a brief period of relaxation, is again gaining momentum. The choice of AI model supplier is ceasing to be a purely technical decision and is becoming a statement in a growing geopolitical conflict.
