Shyam Sankar, Chief Technology Officer (CTO) of Palantir Technologies, has warned that the United States and China are engaged in an “AI arms race,” emphasizing the urgency for the U.S. to take proactive steps in advancing artificial intelligence. His statement underscores the growing competition in AI research, military applications, economic dominance, and intellectual property disputes.
With China’s rapid strides in AI development, including the release of models like DeepSeek-R1, the global balance of power in artificial intelligence is shifting. This article examines the implications of this technological rivalry, its impact on global geopolitics, and the necessity for strategic AI investments in the U.S.
The Emergence of DeepSeek and Its Strategic Significance
A major development in the AI arms race occurred when Chinese AI startup DeepSeek unveiled its latest model, DeepSeek-R1. The model has gained attention for its advanced capabilities and cost-effectiveness, positioning itself as a direct competitor to American AI giants like OpenAI, Google DeepMind, and Anthropic.
The introduction of DeepSeek-R1 has been compared to a modern “Sputnik moment” for AI, highlighting China’s rapid advancements in the field. This AI model demonstrates China’s ability to develop competitive technologies using fewer computational resources, potentially lowering the cost barrier for widespread AI adoption.
According to Foreign Policy (2025), the rise of DeepSeek and similar AI models signals China’s commitment to becoming a dominant force in artificial intelligence. If left unchecked, this could lead to China surpassing the U.S. in AI-driven innovation, cybersecurity measures, and military applications.
The U.S. Response and Palantir’s Role in AI Warfare
Palantir Technologies, known for its work in AI-driven defense solutions, has been at the forefront of advocating for stronger U.S. investment in artificial intelligence. Sankar’s remarks reinforce the company’s position that AI is no longer just a commercial or academic endeavor but a crucial aspect of national security.
Palantir’s strong Q4 2024 financial results highlight its role in this competition. The company reported:
- A 75% increase in earnings per share, reaching 14 cents per share
- A 36% revenue increase, totaling $828 million
These impressive financials suggest that AI-driven solutions, particularly those developed for defense and intelligence, are increasingly in demand. Investors are betting on companies like Palantir to provide the U.S. government and military with the tools necessary to counter China’s AI advancements.
The Broader Geopolitical Context: AI as a Tool for Global Dominance
The AI arms race between the U.S. and China is not occurring in isolation. It is part of a broader geopolitical struggle that extends into economic policy, cybersecurity, and military strategy.
Economic and Trade Conflicts
The United States has imposed stringent restrictions on China’s access to advanced semiconductor technology, limiting the ability of Chinese firms to develop high-performance AI models. In response, China has accelerated domestic chip production efforts to achieve self-sufficiency in AI hardware.
Cybersecurity and Intellectual Property Theft
There have been numerous allegations of Chinese cyberattacks targeting U.S. AI companies and research institutions. According to a 2024 report by the U.S. Cybersecurity and Infrastructure Security Agency (CISA), Chinese-backed hackers have attempted to steal AI research from leading American universities and tech firms.
Military Applications of AI
AI is increasingly being integrated into military operations. The Pentagon has acknowledged that autonomous drone technology, AI-powered surveillance, and predictive analytics will play crucial roles in future warfare. Similarly, China’s military is aggressively investing in AI for battlefield applications, including autonomous weaponry and cyber warfare tools.
China’s AI Strategy: The Belt and Road Initiative and AI Diplomacy
China is not just focused on domestic AI development; it is also exporting AI technology to other countries through its Belt and Road Initiative (BRI). This strategic program includes:
- AI-powered surveillance systems sold to authoritarian regimes
- AI-driven infrastructure projects that integrate smart city technology
- AI collaborations with nations in Africa, Latin America, and the Middle East
China’s AI diplomacy aims to extend its technological influence globally, challenging Western dominance in the sector.
The Urgency of U.S. Action in AI Development
Sankar’s statement underscores the need for the U.S. to take immediate and decisive action in AI development. Delayed responses could result in China surpassing the U.S. in key areas, including:
- AI-based cybersecurity defenses
- Autonomous military technology
- Economic AI-driven productivity enhancements
According to Benzinga (2025), Sankar warned that the time for the U.S. to act was “yesterday.” This reflects the pressing nature of the challenge, emphasizing the importance of increased government funding, private-sector collaboration, and talent acquisition in AI fields.
Conclusion: The AI Arms Race Is Already Underway
The AI competition between the U.S. and China is more than a technological rivalry; it is a battle for economic, military, and geopolitical dominance. With China rapidly advancing in AI development and integrating AI into its strategic initiatives, the U.S. must accelerate its investments in artificial intelligence to remain competitive.
Palantir’s financial performance highlights the growing importance of AI in defense and national security. Meanwhile, China’s AI diplomacy efforts and advancements like DeepSeek-R1 signal that the global AI landscape is evolving at an unprecedented pace.
Failure to act swiftly could result in the U.S. falling behind in the AI race, with significant consequences for economic stability, cybersecurity, and global power dynamics.
References
Foreign Policy. (2025). What DeepSeek Revealed About the Future of U.S.-China Competition. Retrieved from https://foreignpolicy.com/2025/02/03/deepseek-china-ai-artificial-intelligence-united-states-tech-competition/
Investors.com. (2025). Palantir Chief Technology Officer Declares U.S., China ‘AI Arms Race’. Retrieved from https://www.investors.com/news/technology/palantir-stock-chief-technology-officer-declares-us-china-ai-arms-race/
Benzinga. (2025). Palantir’s Shyam Sankar: US Is At War With China In AI—And The Time To Act Was ‘Yesterday’. Retrieved from https://www.benzinga.com/tech/25/02/43453553/palantirs-shyam-sankar-us-is-at-war-with-china-in-ai-and-the-time-to-act-was-yesterday