China has shaken the American hubris on Artificial Intelligence (AI) when it timed the release of ‘Deepseek’ (which rivals the US Open AI’s ChatGPT), with Trump’s pledges of $500bn with US Tech giants Open AI, Oracle to launch a company Stargate and build data centres in order to enhance US supremacy over AI. DeepSeek was founded in December 2023 by Liang Wenfeng CEO of a hedge fund called High-Flyer, which uses AI to analyse financial data to make investment decisons – what is called quantitative trading.
The shock to the US was not so much the technological prowess, but its low cost, which was stated as £6m as compared to £100m spent by Open AI on ChatGPT, as well as the ingenuity of the Chinese in circumventing the blockage by America in accessing NVidia’s high end computer chips. Global investors dumped tech stocks as they worried that the emergence of a low-cost Chinese artificial intelligence model would threaten the dominance of AI leaders like Nvidia, evaporating $593 billion of the chipmaker’s market value, a record one-day loss for any company on Wall Street.
It was the low cost which impressed both Trump and the heads of the US tech firms. According to Trump, “I’ve been reading about China and some of the companies in China, one in particular coming up with a faster method of AI and much less expensive method, and that’s good because you don’t have to spend as much money. I view that as a positive, as an asset.” (Reuters 28/01/25)
However, Trump also called it a “Wake Up Call” because the importance of AI is its use not only in the commercial and social sphere, but critically in the military sector. The shock is similar to when China arrived at 5G communications before the US, with huge military application and implication, and which for the first time in modern history the US had been overtaken by China in the technological sphere.
DeepSeek is thus a consequential leap by China in an attempt to rival US AI dominance and has rattled the US. Trump stated, “The release of DeepSeek, AI from a Chinese company should be a wakeup call for our industries that we need to be laser-focused on competing to win,” (Reuters 28/01/25)
With DeepSeek threatening American dominance after becoming the fastest downloaded application on Apple’s app store, the US along with the Europeans are likely to respond as they did against the Chinese telecommunications company Huwawei’s 5G rollout in America, Canada and the US, by attacking DeepSeek as a vehicle for China to gather intelligence data on users in America and Europe, and therefore constituting a national security concern.
Addressing reporters on Tuesday, White House Press Secretary Karoline Leavitt said the National Security Council would examine the potential national security implications around DeepSeek’s launch, noting that the administration would seek to “ensure American AI dominance.” (CBS News 28/01/25)
Some lawmakers also weighed in with concerns about the application’s access to U.S. users. According to Rep. John Moolenaar, a Missouri Republican who chairs the bipartisan House Select Committee on the Chinese Communist Party,
“The U.S. cannot allow Chinese Communist Party models such as DeepSeek to risk our national security and leverage our technology to advance their AI ambitions…We must work to swiftly place stronger export controls on technologies critical to DeepSeek’s AI infrastructure.” (CBS News 28/01/25).
However, the leap from China still does not match the American leadership with regards to AI chip making as it still had to circumvent the US ban on China accessing NVidea’s powerful AI chips. Until this has been achieved, China will remain reactive and struggling to compete with regards to future AI development.
Be the first to comment on "China’s DeepSeek: A Game Changer for AI Rivalry"