DeepSeek: China’s AI breakthrough shakes tech industry, Wall Street

28 jan -The Chinese AI model, DeepSeek, has skyrocketed to global prominence, becoming the most downloaded app on Apple’s App Store since its release on January 20.

Initially captivating AI enthusiasts, it soon grabbed the world’s attention, with U.S. President Donald Trump calling it a “wake-up call” for American companies to focus on innovation.

What sets DeepSeek apart is its cost-effective design—built at a fraction of the cost of leading models like OpenAI’s, thanks to fewer advanced chips. This development sent shockwaves through the market, causing Nvidia to lose nearly $600 billion in market value, marking the largest single-day loss in U.S. history.

Strategic Implications
DeepSeek raises questions about the efficacy of Washington’s tech sanctions on China, particularly its export ban on advanced chips. Undeterred, China has doubled down on AI, with President Xi Jinping emphasizing its strategic importance as the country pivots from traditional manufacturing to advanced tech industries.

What Is DeepSeek?
At its core, DeepSeek is an AI chatbot similar to ChatGPT, powered by the R1 model with 670 billion parameters, making it the largest open-source language model to date. It rivals OpenAI’s models in mathematics, coding, and reasoning while adhering to Chinese government censorship.

Despite its capabilities, DeepSeek operates on a modest budget of $6 million, significantly less than the billions spent by competitors. This was reportedly achieved by combining a stockpile of Nvidia A100 chips with cheaper alternatives.

The Visionary Behind DeepSeek
DeepSeek’s founder, Liang Wenfeng, a Zhejiang University alumnus with expertise in electronic engineering and finance, launched the company in December 2023. Known for his innovative approach, Liang previously led China’s first quant hedge fund, High-Flyer, and has long advocated for China to close the innovation gap with the U.S.

Global Repercussions
DeepSeek’s rise challenges the notion that massive budgets and cutting-edge chips are essential for AI advancement. Analysts suggest this could disrupt the business models of U.S. tech giants like OpenAI. The uncertainty triggered a tech sell-off on January 27, with the Nasdaq falling over 3% and Nvidia losing its top valuation spot to Apple and Microsoft.

China’s Reaction
While the Chinese government has remained silent, state media is hailing DeepSeek as a symbol of the nation’s growing technological prowess. Experts warn, however, that such developments could fuel “tech isolationism,” as China emphasizes self-reliance.

DeepSeek’s emergence signals a transformative moment for the AI industry, reshaping global tech dynamics and challenging the U.S.’s dominance.