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29-01-2025
WASHINGTON: US President Donald Trump has called the rise of Chinese company DeepSeek “a wake-up call” for the US tech industry, after the emergence of its artificial intelligence (AI) model triggered shockwaves on Wall Street.
Shares in major tech firms such as Nvidia fell sharply, with the chip giant losing almost $600bn (£482bn) in market value.
What has shaken the industry is DeepSeek’s claim that its R1 model was made at a fraction of the cost of its rivals – raising questions about the future of America’s AI dominance and the scale of investments US firms are planning.
DeepSeek has become the most downloaded free app in the US just a week after it was launched.
Responding to the news, Trump said the latest developments in China’s AI industry may be “a positive” for the US.
“If you could do it cheaper, if you could do it [for] less [and] get to the same end result. I think that’s a good thing for us,” he told reporters on board Air Force One.
He also said he was not concerned about the breakthrough, adding the US will remain a dominant player in the field.
However, DeepSeek has raised cyber security concerns in some countries with Australian science minister Ed Husic urging caution.
He told media “there are a lot of questions that will need to be answered in time on quality, consumer preferences, data and privacy management.”
DeepSeek is powered by the open source DeepSeek-V3 model, which its researchers claim was trained for around $6m (£4.2m) significantly less than the billions spent by rivals but this claim has been disputed by others in AI.
Its emergence comes as the US is restricting the sale of the advanced chip technology that powers AI to China.
To continue their work without steady supplies of imported advanced chips, Chinese AI developers have shared their work with each other and experimented with new approaches to the technology.
This has resulted in AI models that require far less computing power than before.
It also means that they cost a lot less than previously thought possible, which has the potential to upend the industry.
Following the shock to markets in the US on Monday, the FTSE 100 stock index of the UK’s biggest publicly-listed companies appeared resilient in early trading on Tuesday, rising by 0.46%.
Futures on the tech-heavy NASDAQ index were also up by 0.1% after Nvidia stock had ticked up slightly in after-hours trading but shares in Japanese AI-related firms including Advantest, Softbank and Tokyo Electron fell sharply, helping to push the benchmark Nikkei 225 down by 1.4%.
Several other markets in Asia are closed for the Lunar New Year holiday. Mainland China’s financial markets will be shut from Tuesday and will reopen on 5 February.
Who founded DeepSeek?
The company was founded in 2023 by Liang Wenfeng in Hangzhou, a city in southeastern China.
The 40-year-old, an information and electronic engineering graduate, also founded the hedge fund that backed DeepSeek.
He was recently seen at a meeting between industry experts and the Chinese premier Li Qiang. In a July 2024 interview with The China Academy, Liang said he was surprised by the reaction to the previous version of his AI model.
“We didn’t expect pricing to be such a sensitive issue,” he said.
“We were simply following our own pace, calculating costs, and setting prices accordingly.” (Int’l Monitoring Desk)
