The United States Department of Homeland Security has ordered federal civilian agencies to remove all technology developed by China's DeepSeek from their IT systems and barred future purchases of the company's products and services, the Wall Street Journal reported on Monday.
The ban, issued under the Federal Acquisition Supply Chain Security Act of 2018, follows a review by the Federal Acquisition Security Council and extends beyond DeepSeek's own software to cover products built by affiliates and any third-party applications that incorporate DeepSeek implementations.
The DHS notice did not cite specific security concerns or set a deadline for agencies to complete the removal.
DeepSeek, the Chinese AI company, caused significant disruption in early 2025 when it released a large language model that appeared to match leading American systems at a fraction of the development cost, briefly wiping billions of dollars from the market capitalisations of Nvidia (NVDA) and other US chip and AI stocks.
The gap between US and Chinese AI capabilities has since narrowed to roughly a couple of months by some estimates, making the competitive and security dimensions of the technology increasingly difficult to separate.
The move is consistent with a broader pattern of US government action against Chinese technology, following earlier restrictions on Huawei hardware and TikTok's social media platform.
The news lands on a day when the Nasdaq Composite is up 1.75%, recovering from last week's 4.5% decline, with the CBOE Volatility Index (VIX) falling 12% to 17.56, suggesting the worst of the market anxiety has passed for now.
For US AI developers, every door closed to a Chinese competitor is, by extension, one left open for them.
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