In a striking commentary, U.S. President Donald Trump has described the ascent of the Chinese artificial intelligence (AI) company DeepSeek as “a wake-up call” for American tech firms. This statement comes in the wake of DeepSeek’s R1 AI model generating significant turbulence on Wall Street, leading to a sharp decline in the market values of major tech corporations, including Nvidia, which saw a staggering loss of approximately $600 billion (£482 billion).
DeepSeek’s emergence has raised critical questions regarding the future of the U.S.’s dominance in AI technology, particularly as the company claims to have developed its R1 model at a fraction of the cost incurred by its competitors. Following the app’s launch, it quickly became the most downloaded free application in the United States within just one week.
Trump’s Perspective on AI Developments
Amidst the unfolding situation, Trump remarked that China’s recent advancements in AI could potentially yield benefits for the U.S. tech landscape. He observed, “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,” while speaking to reporters aboard Air Force One. Despite acknowledging the competitive landscape, Trump expressed confidence in the U.S.’s ability to maintain its leading position in the sector.
DeepSeek has been powered by the open-source DeepSeek-V3 model, which its creators claim was trained for approximately $6 million (£4.2 million) – a stark contrast to the billions typically expended by rival companies. However, this assertion has been met with skepticism from industry experts.
Impact on Global Markets
As news of DeepSeek’s market entry reverberated, it not only affected American tech stocks but also sent ripples through Asian markets. Following Monday’s market shock in the U.S., shares in Japanese AI-associated companies, including Advantest, Softbank, and Tokyo Electron, plummeted, contributing to a 1.4% decline in the Nikkei 225 index. Many Asian markets remained closed for the Lunar New Year holiday, with China’s financial markets scheduled to reopen on February 5.
DeepSeek’s R1 model has been praised for its performance capabilities, reportedly matching some of OpenAI’s latest offerings in tasks such as mathematics, coding, and natural language processing. This technological prowess has garnered endorsements from notable figures, including OpenAI’s CEO Sam Altman, who described DeepSeek’s model as “an impressive model, particularly around what they’re able to deliver for the price,” while cautioning that OpenAI would continue to advance its own offerings.
Experts have noted that DeepSeek’s success amidst hardware restrictions illustrates how innovation in software and data efficiency can overcome technological limitations. Marina Zhang, an associate professor at the University of Technology Sydney, pointed out that this dynamic could disrupt established market norms. Additionally, Ion Stoica, co-founder of AI software firm Databricks, indicated that the reduced costs associated with DeepSeek’s technology might encourage broader adoption of AI across various sectors, potentially accelerating overall market growth.
Nonetheless, skepticism remains regarding some of the claims made by DeepSeek. Notably, tech entrepreneur Elon Musk cast doubt on the company’s assertions, alluding to reports suggesting that DeepSeek utilizes around 50,000 Nvidia chips that have been barred from export to China, stating simply, “Obviously.”