Trump Reacts to DeepSeek’s AI Breakthrough
US President Donald Trump has called the rise of Chinese tech company DeepSeek a “wake-up call” for the American tech industry. The launch of DeepSeek’s R1 AI model has sent shockwaves through Wall Street, causing major US tech stocks, including Nvidia, to plummet. Nvidia alone lost nearly $600 billion (£482 billion) in market value.
The uproar stems from DeepSeek’s claim that its R1 AI model was developed at a fraction of the cost of its competitors, raising questions about the future of US AI dominance and the investments planned by American companies.
DeepSeek Takes the Spotlight
Within just a week of its release, DeepSeek became the most downloaded free app in the US. Despite concerns, Trump expressed optimism about the developments, calling it a potential opportunity.
“If you can achieve the same results at a lower cost, that’s a good thing for us,” Trump said aboard Air Force One. He reassured reporters that the US will maintain its position as a leader in AI innovation.
What Sets DeepSeek Apart?
DeepSeek’s success lies in its open-source model, DeepSeek-V3, which its creators claim was trained for $6 million (£4.2 million). This figure is significantly less than the billions spent by rival models. However, this claim has been met with skepticism from some industry experts.
Amid US restrictions on the export of advanced chips to China, DeepSeek has leveraged collaborative innovation and new methods that reduce reliance on expensive hardware. The result? AI models requiring far less computing power, which significantly lowers development costs.
Founding of DeepSeek
DeepSeek was founded in 2023 by Liang Wenfeng, a 40-year-old information and electronic engineering graduate based in Hangzhou, China. Liang also established the hedge fund that financially supported DeepSeek.
In a 2024 interview with The China Academy, Liang expressed surprise at the pricing sensitivity surrounding their AI models. “We were just following our process, calculating costs, and setting prices accordingly,” he said.
Global Tech Market Impacts
DeepSeek’s launch has caused ripples across global tech markets. On Monday, shares of Japanese AI-related firms like Advantest, Softbank, and Tokyo Electron also tumbled, dragging the Nikkei 225 index down by 1.4%.
DeepSeek’s Achievements and Industry Praise
DeepSeek’s R1 model is being touted as delivering performance comparable to OpenAI’s advanced models in tasks like coding, math, and natural language reasoning. Even Sam Altman, CEO of OpenAI, acknowledged its impressive capabilities while maintaining that OpenAI will deliver superior models in the future.
Marina Zhang, an expert on China’s high-tech industries, noted, “DeepSeek shows that software ingenuity and data efficiency can compensate for hardware constraints.” Similarly, Ion Stoica, co-founder of Databricks, believes DeepSeek’s low-cost model could accelerate the adoption of AI across industries, expanding the market at a faster rate.
Skepticism Around DeepSeek’s Claims
Despite its achievements, skepticism remains. DeepSeek claims its model uses just 2,000 specialized chips, compared to the 16,000 needed for competing models. However, Elon Musk hinted that DeepSeek might actually be relying on 50,000 Nvidia chips banned from export to China, responding to the news with a simple “Obviously.”
Key Takeaways
- DeepSeek has disrupted the AI landscape, offering advanced capabilities at lower costs.
- Its open-source model, DeepSeek-V3, has been met with both praise and skepticism.
- The emergence of DeepSeek highlights the innovation of China’s AI sector, even amid US chip export bans.
The success of DeepSeek poses critical questions for US tech giants and their investment strategies, emphasizing the need for efficiency and adaptability in the global AI race.
