The rise of DeepSeek, a Chinese artificial intelligence (AI) startup, is sending ripples through the global tech market. This emerging competitor is challenging the dominance of established US companies and sparking concerns about the future of AI development. Let's delve into the key aspects of DeepSeek's impact and the broader implications for the AI landscape.
As highlighted in a Thomson Reuters report, DeepSeek is quickly becoming a notable player on the world stage of AI. The company recently launched a free AI assistant that distinguishes itself by its claim of using cheaper chips and requiring less data. This approach directly challenges the prevailing notion that AI advancement necessitates ever-increasing investments in computing power and energy.
DeepSeek's AI application has rapidly gained popularity, surpassing even ChatGPT in the rankings of free apps on Apple's App Store in both China and the United States. This achievement underscores the growing demand for AI solutions and the potential for new entrants to disrupt the market.
The surge in DeepSeek's popularity triggered a sell-off of shares in Nvidia, a leading supplier of chips crucial for AI development. On one Monday, Nvidia's stock plummeted by 17%, reflecting investor concerns about increased competition and potential shifts in the AI hardware landscape.
Other tech companies, including Broadcom, Marvell Technology, Microsoft, Meta Platforms, Alphabet (Google's parent company), and AI server manufacturer Dell Technologies, also experienced stock declines, indicating a broad market reaction to DeepSeek's emergence.
DeepSeek, officially known as Hangzhou Depth Seeker Artificial Intelligence Basic Technology Research Co., Ltd., was established in July 2023. The company focuses on developing advanced large language models (LLMs) and related technologies. Despite its relatively short history, DeepSeek has quickly made a name for itself as an innovator in the AI space.
In a research paper released last month, DeepSeek researchers claimed that the development of their DeepSeek-V3 model, launched on January 10, cost less than $6 million. This figure is notably lower compared to the development costs associated with many competing AI models, challenging the assumption that AI development demands increasingly vast resources.
DeepSeek's rise also presents a challenge to the United States' dominance in the AI sector. Despite US efforts to restrict the export of computer chips to China since 2022, hindering the country's advanced supercomputing development, DeepSeek has managed to innovate and compete effectively. The US has been doubling down on its own AI development initiatives, and some of this is designed to counter the competition from AI companies like DeepSeek.
The US government is increasing investments in AI infrastructure. For example, the US government has promised to direct up to $500 billion to the private sector for AI research infrastructure, including $19 billion earmarked for Stargate, a dedicated data center. This project is led by OpenAI and SoftBank Group to create innovative AI opportunities in the US.
Robert Savage, head of markets strategy and insights at BNY Mellon, noted that DeepSeek's emergence as a competitor to US AI dominance raises questions about trade, semiconductor chips, and energy demands. He described the market as "unsettled," highlighting the broader geopolitical and economic implications of the intensifying AI race.
DeepSeek's rapid ascent signifies the growing global competition in the field of artificial intelligence. As more companies and countries invest in AI research and development, the landscape is likely to become even more dynamic and competitive. This trend could lead to further innovation, lower costs, and a broader range of AI applications that benefit society as a whole.
