The Alarming National Security Implications of DeepSeek and China’s A.I. Breakthrough

A Chinese A.I. upstart stuns markets, rattles the Pentagon, and threatens to upend America’s grand plans for technological dominance.

A digital composition featuring multiple overlapping smartphone screens displaying the DeepSeek logo, symbolizing the rapid emergence and proliferation of the Chinese AI company's technology.
DeepSeek’s rapid rise in the A.I. landscape has sent shockwaves through Wall Street and Washington, with its open-source model challenging the dominance of established U.S. tech giants. Anadolu via Getty Images

Wall Street started the week in a cold sweat thanks to DeepSeek, an obscure Chinese A.I. lab that just dropped a bombshell: a lightning-fast, budget-friendly large language model that’s shaking Silicon Valley to its core. The Hangzhou-based firm claims to have developed it over just two months at a cost under $6 million, using reduced-capability chips from Nvidia (NVDA), whose stock dropped by more than 15 percent early Monday (Jan. 27). If this newcomer, established in mid-2023, can produce a reliable A.I. model that’s cheaper and faster than existing apps, that’s a stunning blow to U.S. firms such as OpenAI, Anthropic and Meta (META). DeepSeek’s new A.I. app is already available online, including at Apple’s app store, and it’s moving fast. 

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The timing of this couldn’t be worse for American business, given President Donald Trump’s audacious announcement last week of a new $500 billion initiative termed Stargate AI, involving OpenAI, SoftBank (SFTBF) and Oracle, which Trump promised would ensure “the future of technology” for America, creating hundreds of thousands of jobs in the process. Has that promising vision already evaporated?

It’s too soon to say, but it’s now evident that America and China are in a tight race to harness the power of A.I. for the world. Comparisons to the U.S.-Soviet Cold War “space race” are impossible to miss, and many are comparing DeepSeek’s innovation to the Soviet launch of Sputnik, the first artificial satellite, in 1957, which shocked Americans with the realization that Moscow reached space before we did.

Like Sputnik, DeepSeek’s claimed progress has alarming national security implications. While Wall Street is worried about valuations, the Pentagon is fretting over Chinese advances in A.I. that may give the People’s Liberation Army an edge in warfare. Given how top U.S. military leaders assess that our increasingly open conflict with Beijing may devolve into severe fighting during Trump’s second term, this is no idle threat.

The Pentagon’s interest in A.I. and its military implications is hardly new. Five years ago, the Department of Defense’s Joint Artificial Intelligence Center was expanded to support warfighting plans, not just experiment with new technology. Last year, Craig Martell, the Pentagon’s top A.I. official, pronounced that new technology was revolutionizing how DoD does business. As Martell explained: Imagine a world where combatant commanders can see everything they need to see to make strategic decisions … Imagine a world where those combatant commanders aren’t getting that information via PowerPoint or via emails from across the [organization] — the turnaround time for situational awareness shrinks from a day or two to ten minutes.”

While the vaunted “fog of war” can never be fully lifted, A.I. promises to cut through the haze faster and with a precision never seen in the history of warfare. A.I. will reduce the information burden on military staff with speed and accuracy, enabling a tighter “decision loop” for U.S. generals and admirals. If DeepSeek’s innovation is all it’s being sold as, Beijing may have gained a decisive advantage that will enable the PLA to out-think and outmaneuver the U.S. military in any confrontation in the Western Pacific, most likely over Taiwan. 

The U.S. Intelligence Community is just as concerned about China’s A.I. progress. In recent years, America’s spy agencies have spent prodigious sums on determining how to harness A.I. to boost the speed and accuracy of intelligence assessments. A.I. can tamp down the “information firehose” that hampers the speedy analysis of complex intelligence problems, employing technology to make human assessments faster and more precise.

Last summer, Lakshmi Raman, the Central Intelligence Agency’s top A.I. official, illuminated how this works. “Imagine all of the news stories that come in every minute of every day from around the world. That is also the data that we are neck deep in, and that we’ve got to leverage A.I. in order to help us to triage,” she explained, adding that A.I. was boosting CIA’s clandestine intelligence collection, not just analysis.

The National Security Agency, too, has embraced A.I. with gusto, recognizing its game-changing potential for sifting through vast amounts of collected intelligence data to find the puzzle pieces of national security value. NSA is also protecting America from foreign A.I. programs, and the agency recently established the Artificial Intelligence Security Center. As NSA’s Director General Timothy Haugh stated, “When an enterprise runs A.I. systems, it opens up to new attack surfaces in the AI development lifecycle and A.I. abilities in model inference services. We need to secure and protect these systems from threats and buy down risks today.”

That threat from foreign A.I. just got a boost with DeepSeek’s claimed progress. The good news here is that nobody’s certain of how real China’s A.I. progress actually is. Communists lie frequently. The Soviet success with Sputnik, boosted by Moscow’s putting Yuri Gagarin in space in 1961, a month before America did the same, proved illusory. The Soviet space program was hampered by quality and safety problems, and despite early Kremlin propaganda feats, America won the space race with the 1969 Moon landing. The bad news is that the clock’s ticking.

John R. Schindler served with the National Security Agency as a senior intelligence analyst and counterintelligence officer 

The Alarming National Security Implications of DeepSeek and China’s A.I. Breakthrough