In January 2025, the Chinese AI company “DeepSeek” announced a new technology that has sent shockwaves through the AI industry. If this technology is real, it could dramatically change the cost and environment of AI development, potentially overturning the structure of technological dominance. This is not just a technological innovation but a historic turning point that could impact the global economy and military strategy.
What is the DeepSeek Shock?
In January 2025, the Chinese AI company “DeepSeek” unveiled its latest large-scale language model, “DeepSeek R1,” which has caused a stir in the AI industry worldwide. According to reports, this model enables deep learning execution without relying on NVIDIA’s expensive GPUs. Additionally, DeepSeek R1 is reported to demonstrate high-performance language processing capabilities in a low-cost environment, with its development cost estimated at only $5.6 million.
Why is this significant?
This represents a completely different approach, solving the computational load required for AI development through “logic” rather than hardware, indicating the potential to upend the previously NVIDIA-dominated AI development structure.
Until now, NVIDIA’s expensive GPUs were indispensable for development, making financial resources a major factor in AI development. However, if DeepSeek enables AI development using chips from Apple, Intel, and AMD, this model could become widely adopted globally, potentially being standardized in AI research environments at universities.
The Dominant Players in AI Development Until Now
Until now, large-scale language models and artificial intelligence (AI) have been primarily led by American companies such as OpenAI, Google DeepMind, and Anthropic. These companies have utilized NVIDIA’s H100 and A100 GPUs to train large-scale language models and establish cutting-edge deep learning technologies.
The Technical Characteristics of NVIDIA Chips
NVIDIA’s chips are particularly suited for large-scale computing, featuring high-speed execution with CUDA cores. For instance, the H100 chip is equipped with Tensor Cores optimized for high-density matrix calculations, significantly reducing the training time for large-scale language models.
DeepSeek’s technology has the potential to completely overturn this dependency, leading to a decline in NVIDIA’s stock as it loses its AI market dominance.
China’s Technological Advancement Catching Up to America
The DeepSeek announcement is not just about AI technology; it signals that China’s technological capabilities have caught up with America, with some reports even suggesting that China has surpassed the U.S. This poses a significant challenge to America’s long-standing technological dominance.
China’s Digital Generation Taking the Lead
China’s digital-native generation is no longer just “catching up” but is now “restructuring solutions” independently. The U.S. has already been wary of Chinese platforms such as TikTok and WeChat, and large-scale technologies like DeepSeek follow the same trajectory.
U.S. Regulations Against China
In response to such technological advancements, the U.S. has been tightening its regulations against China. Specifically, the U.S. has imposed stricter export controls on advanced semiconductors and AI technologies, limiting the flow of cutting-edge technology to Chinese companies. Measures such as restricting the export of NVIDIA’s latest GPUs and halting ASML’s supply of advanced EUV lithography equipment are being implemented as strategies to slow down China’s technological progress.
The Possibility of Further Strengthening Regulations
Nevertheless, China continues to develop its own AI technologies, producing groundbreaking models like DeepSeek. This situation suggests that the effectiveness of the U.S.’s technological blockade may be limited, raising the question of whether further restrictions or countermeasures will be introduced.
Current Comparisons to the U.S.-Japan Trade Friction and Future Outlook
The impact of DeepSeek on the world resembles the “U.S.-Japan Trade War of the 1980s (Trade War – U.S.-Japan Semiconductor Trade Conflict)” in terms of background and structure. In other words, just as the U.S. sought to dismantle Japan’s semiconductor dominance, it may now be aiming to suppress China’s AI hegemony. However, the opposing structure differs significantly in several key aspects.
Japan Forced into Agreements vs. China’s Defiance
Japan, as an ally of the United States, unwillingly complied with forced agreements such as the Plaza Accord and the U.S.-Japan Semiconductor Agreement. In contrast, China has maintained a defiant stance against U.S. sanctions and is not a country that can be easily coerced like Japan.
China’s Self-Sufficient Domestic Economy
China, with a domestic market of 1.4 billion people, has established an economic structure that does not easily rely on other countries. Additionally, BRICS serves as an economic bloc that minimizes dependency on the U.S. This is a level of economic self-sufficiency that Japan was never able to achieve.
Technology Flowing Beyond Organizational Boundaries
During the U.S.-Japan trade friction, Japanese technology flowed into the U.S. and became an integral part of its economic structure. If Chinese technology, like DeepSeek, spreads widely across universities and research institutions worldwide, it would not merely be a ‘new Chinese AI technology’ but a force capable of reshaping global technological trends.
AI is Not Just Technology but Infrastructure
At this stage, DeepSeek’s technology is still in the verification phase. However, if proven real, it could mean that China’s AI development capabilities have surpassed those of the U.S., which could have direct implications for Japan’s economy and national security.
If DeepSeek’s technology undermines America’s technological dominance, Japan’s position will become even more challenging. While Japan’s security is partially ensured through the “U.S.-Japan Security Treaty,” it is necessary to consider the implications if America experiences a decline.
It may sound exaggerated, but AI is an indispensable military technology already utilized in drones, battlefield tactical systems, and autonomous weapons. If DeepSeek is legitimate, it could enable the development of low-cost, high-performance AI models, accelerating real-time decision-making and the evolution of autonomous weapons on the battlefield. This would have a significant impact on national defense strategies and international security.
No Longer Just “Copycat China”
To reiterate, this is not just another AI technology—it is a fundamental shift in AI development where China may have surpassed America. The fact that this was achieved not through hardware but through software makes it an even greater threat.
Given this situation, it is uncertain whether Japan’s current pro-China diplomatic stance, including Prime Minister Ishiba postponing a meeting with President Trump, will turn out to be the right decision in the future.
Additional Notes: However, the reported development cost of $5.5 million seems somewhat dubious. Furthermore, security concerns surrounding this technology need to be carefully considered. As this technology is available for free, those interested should explore its usage with caution.
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