Tue, 28 Jan 2025

China's DeepSeek AI shakes industry and dents America's swagger

The app spooked the markets as well as the bullish sense of American superiority in AI development.

* DeepSeek, a new Chinese AI app, has caused a massive sell-off in major tech stocks after it was downloaded over 1 million times on Apple's US App Store.
* Shares of Nvidia, an AI chip designer, plummeted by 17% and lost nearly $600bn in market value, the biggest drop in US stock market history.
* DeepSeek's developers claim they built their model for just $5.6m, a tiny fraction of what other AI giants like OpenAI have spent on their models ($5bn).
* Silicon Valley is stunned by DeepSeek's arrival and some experts question its financials and the accuracy of its claims.
* The sudden emergence of DeepSeek has shaken America's confidence in its leadership in AI and raised questions about the country's dominance in the sector.
* US President Trump called DeepSeek a "wake-up call" for the American tech industry, saying that finding cheaper ways to develop AI is a good thing.
* Energy stocks also took a hit on Monday as investors wonder if America needs to spend heavily on data centers and rare-earth metals to stay ahead in AI.
* The future of semiconductor giants like Nvidia remains unclear as DeepSeek's model was developed with existing technology and open-source software.
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