AI Upstart from China Sends Shockwaves Through Tech Industry
A New Player in Town
Rumors had been circulating for days about a Chinese artificial intelligence startup that was gaining attention for its impressive ChatGPT rival. At the World Economic Forum in Davos, whispers of Hangzhou-based DeepSeek and its R1 model sparked concerns that countries like the US needed to accelerate their AI advancements.
Silicon Valley Takes Notice
The conversation around DeepSeek gained momentum when tech heavyweights like investor Marc Andreessen and AI pioneer Yann LeCun began praising the startup’s model. Andreessen called it “one of the most amazing and impressive breakthroughs” he’s ever seen. As a result, DeepSeek’s AI assistant skyrocketed to the top of Apple’s iPhone download charts and Google’s Play Store, overwhelming the startup’s systems.
System Overload
The sudden surge in interest forced DeepSeek to limit signups to mainland China telephone numbers, citing “large-scale malicious attacks” on its services. This move sparked a $1 trillion rout in US and European technology stocks, as investors questioned the spending plans of major American companies. The decline in Nvidia Corp.’s shares alone erased a record amount of stock-market value.
A Different Approach
DeepSeek’s AI model stands out from its rivals by showing its work and reasoning when addressing user queries. This transparency has earned praise from users on Apple’s app store and Android Play Store. Founded by quant fund chief Liang Wenfeng, DeepSeek’s open-sourced AI model is prompting a reevaluation of the billions of dollars spent on AI research.
Rethinking AI Spending
The initial success of DeepSeek raises concerns about the pricing power of US tech giants and whether their massive AI spending needs re-evaluation. As Jun Rong Yeap of IG Asia notes, “While it remains to be seen if DeepSeek will prove to be a viable, cheaper alternative in the long term, initial worries are centered on whether US tech giants’ pricing power is being threatened.”
Censorship Concerns
Like other Chinese-made AI models, DeepSeek self-censors on politically sensitive topics in China. This may raise eyebrows among international users who are not accustomed to such censorship.
A New Era in AI Development
DeepSeek’s emergence challenges the assumption that advanced AI requires increasing amounts of computing power and energy. The startup’s efficient model, developed at a fraction of the cost of its rivals, is a testament to China’s engineering prowess. As computer scientist Kai-Fu Lee notes, “When you have limited compute power and money, you learn how to build things very efficiently.”
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