(qlmbusinessnews.com . Tues 28th Jan, 2025) London, UK —
Chinese AI Chatbot DeepSeek Disrupts Global Tech Markets.
Shares in major US technology companies have plummeted following the rapid rise of DeepSeek, a cost-effective chatbot developed by a Chinese artificial intelligence firm.
Since its launch last week, DeepSeek has surged in popularity, surpassing competitors like OpenAI's ChatGPT to become the most downloaded free app in the United States. The chatbot’s emergence has sent shockwaves through global markets, raising questions about the future of American dominance in AI technology.
On Monday, major tech firms faced a significant downturn in share prices, with Nvidia falling by 16%, Microsoft declining by 3.7%, and Google’s parent company, Alphabet, slipping over 3%. In Europe, Dutch chip equipment giant ASML saw its shares drop by more than 7%, while Siemens Energy suffered a 20% plunge.
The DeepSeek chatbot is powered by the open-source DeepSeek-V3 model, which its creators claim was developed for just $6 million — a fraction of the billions spent by competitors. The developers credit their cost efficiency to using existing technologies and open-source software, which can be freely modified and distributed.
Analysts believe this innovation could disrupt the tech landscape, with Fiona Cincotta, a senior market analyst at City Index, stating: “The introduction of a low-cost Chinese AI model has caught the market off-guard. This could raise concerns over the profitability of rivals, especially given their heavy investments in expensive AI infrastructure.”
DeepSeek’s rise comes as the US government enforces stricter regulations on exporting advanced AI chips to China. In response, Chinese AI developers have turned to collaboration and innovative approaches to create models that require less computing power and cost significantly less to produce.
Earlier this month, DeepSeek claimed its latest model, DeepSeek-R1, delivered performance on par with OpenAI’s cutting-edge systems in areas like maths, coding, and natural language processing. Silicon Valley investor Marc Andreessen described the development as “AI’s Sputnik moment,” likening it to the Soviet Union’s launch of the first artificial satellite, which caught the US off-guard in 1957.
Despite its meteoric success, DeepSeek has faced challenges. On Monday, the company announced it would temporarily restrict new registrations due to “large-scale malicious attacks” on its software. Existing users, however, remain unaffected.
Founded in 2023 by Liang Wenfeng in Hangzhou, China, DeepSeek is the result of strategic planning and resource acquisition. Liang, a graduate in information and electronic engineering, reportedly stockpiled Nvidia A100 chips — now banned from export to China — pairing them with more affordable lower-end chips to power DeepSeek’s models.
While DeepSeek’s rise has startled global markets, some analysts remain cautious about its long-term impact. Citi analysts noted that US firms still hold an advantage due to better access to advanced chips and infrastructure.
As DeepSeek continues to make waves, questions linger about the balance of power in the AI race and how US firms will adapt to this unexpected challenge.
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