By Karen Freifeld
June 16 (Reuters) – The U.S. has held off adding China’s AI startup DeepSeek, memory chipmaker CXMT and more than 100 other companies flagged as national security risks to a trade blacklist, according to two people familiar with the matter, as the Trump administration tries to avoid escalating tensions with Beijing.
DeepSeek, CXMT and other companies were approved by an interagency committee last year for addition to the Commerce Department’s Entity List, which is being reported for the first time. Reuters is also exclusively reporting the large number of companies awaiting publication on the list.
DeepSeek, whose low-cost AI model sent shockwaves through the technology world in January 2025, has supported China’s military and intelligence operations, a senior U.S. State Department official told Reuters last year, adding that the startup tried to use Southeast Asian shell companies to illegally access advanced U.S. chips.
This year, Anthropic said it identified a campaign by DeepSeek and two other Chinese AI labs to illicitly extract capabilities from its Claude AI platform to improve their own models, and OpenAI warned lawmakers that DeepSeek also was targeting its models.
ChangXin Memory Technologies, China’s top memory chipmaker, was designated as a Chinese military company by the Defense Department under the Biden administration. The Commerce Department considered placing it on its Entity List more than a year ago, Reuters and others reported.
U.S. companies cannot ship goods, software and technology to companies on the list without a license, which is likely to be denied.
DeepSeek and CXMT could not be reached for comment outside normal business hours. The Commerce Department’s Bureau of Industry and Security, which oversees the list, did not directly respond to questions about why updates to the Entity List had not been published since last year, or comment on DeepSeek and CXMT.
The bureau uses “many policy and enforcement tools, including the Entity List … on a daily basis to ensure we are combating bad actors,” BIS said in a statement.
When asked for comment, China’s foreign ministry said the U.S. should cease “politicizing, instrumentalizing, and weaponizing” economic, trade and technological issues.
“China has consistently opposed the U.S.’s broad interpretation of the concept of national security and its abuse of export control measures, such as the Entity List, to contain and suppress Chinese enterprises,” spokesperson Lin Jian said at a regular news briefing on Wednesday.
TENSE RIVALRY
The United States and China are locked in a tense rivalry over technology, trade and national security, with Washington using tariffs and export controls to keep Beijing at bay while China maintains a stranglehold on rare earth minerals that defense, auto and chipmaking firms need.
The U.S. has not posted any additions to its Entity List since October, the longest stretch between new postings in more than a decade, said Philip Luck, who studies global supply chains at the Washington-based Center for Strategic and International Studies.
“The Entity List is like whack-a-mole and you’ve got to keep whacking the moles,” Luck said, referring to an arcade game.
The lack of new listings is likely allowing American technology to reach adversaries who could use it against the U.S., he added.
“The fact the U.S. hasn’t put any companies on the Entity List since October demonstrates that trade policy is overshadowing the use of a critical national security tool,” said Kevin Kurland, a former Commerce Department official.
Multiple Chinese companies were slated for the list for supplying Russian drones that were recovered in Poland last September, one of the people said. Listing those lesser-known companies is even more important to U.S. suppliers who may not know the nature of their business, the person said.
Dozens of other Chinese companies were identified last year as national security risks for selling restricted Nvidia chips to Chinese universities, but were not added to the list, a third source said.
Chinese companies that make and sell drones and robot dogs for the country’s military were also selected as potential targets, according to the third person.
Since late 2025, Jeffrey Kessler, under secretary of commerce for industry and security, has sought to avoid listing Chinese parties for fear of escalating tensions between the U.S. and China, according to the first source and other people familiar with the matter.
The dearth of listings offers a window into what many see as a larger problem at the Bureau of Industry and Security under the second Trump administration — an inability to act or issue new rules to combat threats that can be reduced by restricting exports. Early last year, for instance, the bureau said it would replace a regulation created under former President Joe Biden to govern global access to U.S.-origin AI chips. But it has still not published a replacement, and is not enforcing the earlier rule, opening a potential loophole that may have allowed the chips to be exported to Chinese companies outside China.
Decisions regarding whether to add an entity to the list are made by an interagency committee, which includes officials from the departments of Commerce, Defense, Energy, State and sometimes Treasury. But the first two sources said the committee has approved companies for the list and Commerce has not published them.
At least 75 Chinese entities in advanced semiconductor production, semiconductor manufacturing equipment production and AI modeling have gone through the committee and were slated for blacklisting, one of the sources said.
(Reporting by Karen Freifeld; Additional reporting by Beijing newsroom; Editing by Rod Nickel and Kate Mayberry)
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