DeepSeek AI Shakes Up the Tech World, Leaving U.S. Companies Worried
A new Chinese artificial intelligence (AI) tool called DeepSeek has caused a major stir in the tech world. The AI startup shot to the top of app download charts and even caused stock prices of big U.S. tech companies to drop. According to the BBC, DeepSeek’s sudden success shocked investors, wiping billions off the value of major companies like Nvidia.
Why Is DeepSeek a Big Deal?
In January, DeepSeek released its latest AI model, DeepSeek R1, which it claimed could match the power of OpenAI’s ChatGPT while being much cheaper to train. The BBC explains that this surprised many experts because it challenged the idea that only American companies could lead in AI development.
Former U.S. President Donald Trump called it a “wake-up call” for American companies, according to the BBC. Investors had assumed that U.S. tech giants like OpenAI and Nvidia would dominate AI, but DeepSeek’s rise proved otherwise.
What Exactly Is AI?
To understand DeepSeek’s impact, it helps to know what AI is. The BBC explains that artificial intelligence is when a machine learns from large amounts of information and recognizes patterns to solve problems. AI tools like ChatGPT and DeepSeek, known as generative AI, can generate text, answer questions, and even help with tasks like writing emails, summarizing documents, and coding.
How Is DeepSeek Different from ChatGPT?
DeepSeek works similarly to ChatGPT, but the BBC notes that it has key differences:
- It performs well in areas like math and coding.
- It uses a reasoning model, meaning it simulates how humans think through problems step by step.
- It was much cheaper to train than ChatGPT—costing only $6 million, compared to the $100 million+ OpenAI spent on GPT-4.
Another surprising factor, according to the BBC, is that DeepSeek managed to bypass U.S. restrictions on high-tech chips. The company stockpiled Nvidia’s A100 chips, which have been banned from export to China since 2022. Experts believe DeepSeek also used cheaper chips alongside the A100s, making its AI both powerful and cost-effective.
This mix of high performance and low cost made DeepSeek a hit, becoming the most-downloaded free app in Apple’s App Store in the U.S. However, the BBC reports that DeepSeek’s rise wasn’t smooth—shortly after launch, it suffered from cyberattacks and server issues.
DeepSeek and Censorship
Unlike ChatGPT, which answers most questions, DeepSeek avoids politically sensitive topics due to Chinese government censorship. The BBC tested this by asking DeepSeek about the 1989 Tiananmen Square massacre, and the chatbot refused to provide details—something common with AI models developed in China.
Who Created DeepSeek?
The BBC explains that DeepSeek was founded in December 2023 by Liang Wenfeng, a Chinese entrepreneur with a background in finance, not tech. Liang runs a hedge fund called High-Flyer, which uses AI to analyze stock market data. Unlike Silicon Valley tech founders, Liang’s experience comes from the world of quantitative trading (using AI to make investment decisions).
Liang has been vocal about wanting China to compete with the U.S. in AI. In one of his rare interviews, he told the BBC that Silicon Valley was surprised to see a Chinese company as an innovator, rather than just a follower.
Why Are U.S. Companies Worried?
DeepSeek’s success raised big questions about whether AI development really needs expensive chips and massive budgets. The BBC explains that this uncertainty caused a stock market panic, with the U.S. tech-heavy Nasdaq index dropping over 3%.
Nvidia, the biggest supplier of AI chips, lost 17% of its stock value before recovering slightly, according to the BBC. The company’s market value shrank from $3.5 trillion to $2.9 trillion, knocking it down to third place behind Apple and Microsoft.
Analysts told the BBC that DeepSeek’s lower costs challenge the idea that only wealthy companies can develop top AI models. OpenAI, valued at $157 billion, now faces pressure to prove that its high spending is worth it.
Global Concerns About DeepSeek
Despite its success, DeepSeek is facing government restrictions in multiple countries. The BBC reports that:
- Australia has banned DeepSeek on government devices, calling it a national security risk.
- Italy blocked the app and ordered DeepSeek to stop processing personal data of Italian citizens.
- Other countries, including Ireland, France, and South Korea, are investigating how DeepSeek handles user data, which is stored on Chinese servers.
How Has China Reacted?
The BBC notes that China sees DeepSeek’s rise as a huge victory in its push for technological independence. While the Chinese Communist Party has not officially commented, Chinese state media is celebrating, claiming that DeepSeek is giving U.S. companies sleepless nights.
However, some experts warn that this excitement could lead to “tech isolationism”, where China and the U.S. build separate AI ecosystems, making future collaboration difficult.
The Bigger Picture
The BBC suggests that DeepSeek’s success signals a major shift in AI development. Until now, most people assumed the U.S. would dominate AI, but China has proven it can compete at the highest level. With costs dropping and new strategies emerging, the race for AI supremacy is just getting started.
Credit : BBC
https://www.bbc.com/news/articles/c5yv5976z9po