US accuses six Chinese AI firms of industrial-scale model distillation theft

US intelligence and cybersecurity agencies (CISA, NSA, FBI) have issued a joint advisory confirming that China-based AI firms are conducting industrial-scale knowledge distillation to extract US AI model capabilities. This marks an escalation in US-China AI competition, shifting focus from hardware to software/IP theft. The specific targets and full scale of the alleged theft remain largely undisclosed, though six Chinese firms, including DeepSeek and Alibaba, are claimed to be involved.