US officials are looking at the national security implications of the Chinese artificial intelligence app DeepSeek, while President Donald Trump's crypto czar says it is possible that intellectual property theft could have been at play.
The National Security Council is reviewing the app's implications, White House press secretary Karoline Leavitt said on Tuesday,
"This is a wake-up call to the American AI industry," she said, echoing Trump's comments from a day earlier while also saying the White House was working to "ensure American AI dominance".
Investors sold technology stocks across the globe on Monday over concerns the emergence of a low-cost Chinese AI model would threaten market dominance of US-based AI leaders such as OpenAI and Alphabet's Google.
White House artificial intelligence and crypto czar David Sacks was asked on Fox News if there was intellectual property theft involved in the rise of DeepSeek.
"Well, it's possible. There's a technique in AI called distillation, which you're going to hear a lot about, and it's when one model learns from another model," Sacks said in the interview.
"I think one of the things you're going to see over the next few months is our leading AI companies taking steps to try and prevent distillation ... That would definitely slow down some of these copycat models," he said.
During his administration, former president Joe Biden placed a wide range of export restrictions on AI chips and the equipment used to make them, hoping to hamper AI development in China.
Trump on Monday said the Chinese app should act as a spur for American companies and added it was good that companies in China have come up with a cheaper, faster method of artificial intelligence.
"The release of DeepSeek AI from a Chinese company should be a wake-up call for our industries that we need to be laser-focused on competing to win," he said.
Sacks told Fox News on Tuesday that American AI companies had "got a little distracted" and "maybe got a little bit complacent".
Trump said Chinese leaders had told him the US had the world's most brilliant scientists, and he indicated that if Chinese industry could come up with cheaper AI technology, US companies would follow.
"We always have the ideas. We're always first. So I would say that's a positive that could be very much a positive development. So instead of spending billions and billions, you'll spend less, and you'll come up with, hopefully, the same solution," he said.
Efforts to stop the flow of AI chips to China from US companies such as Nvidia and Advanced Micro Devices were spearheaded by the Commerce Department. Trump's choice to lead that agency, Wall Street banker Howard Lutnick, is scheduled to appear in his nomination hearing on Wednesday.
