The rise of the Chinese company DeepSeek has caused a significant shake-up in the tech industry, particularly in the artificial intelligence (AI) sector. DeepSeek’s breakthrough AI model, R1, has drawn attention for its ability to deliver high performance at a fraction of the cost compared to its U.S. rivals, such as OpenAI. This development has raised concerns about the future of America’s dominance in AI, as shares of major tech companies like Nvidia dropped sharply, with Nvidia losing nearly $600 billion in market value.
DeepSeek’s AI model, powered by the DeepSeek-V3 framework, was reportedly trained for just $6 million, much less than the billions spent by U.S. firms on similar models. DeepSeek’s success has been attributed to its efficiency in training AI using far fewer specialized chips than competitors, with claims of needing only around 2,000 chips compared to the 16,000 or more used by other leading models. This cost reduction has the potential to significantly disrupt the industry, making AI more accessible and affordable for businesses.
In response to the development, President Trump acknowledged that cheaper, efficient AI technology could be beneficial for the U.S., although he expressed confidence that the U.S. would maintain its leadership in the AI field. Liang Wenfeng, the founder of DeepSeek, which launched in 2023, has previously mentioned the company’s focus on balancing cost and performance.
Despite DeepSeek’s claims, some in the industry, including Elon Musk, have raised doubts about the accuracy of the company’s figures, particularly regarding the number of Nvidia chips involved in its AI model. However, others see the lower cost as a potential game-changer for the wider adoption of AI, with the possibility of accelerating progress and expanding the AI market.
Overall, while DeepSeek’s AI capabilities have been praised by figures like OpenAI’s Sam Altman, the situation has raised questions about the future competitive landscape, especially as the U.S. continues to impose restrictions on the sale of advanced chip technology to China.
