Yesterday, U.S. tech stocks tumbled. Giant companies like Meta and Nvidia faced a barrage of questions about their future. Tech executives took to social media to proclaim their fears. And it was all because of a little-known Chinese artificial intelligence start-up called DeepSeek.
How could a company that few people had heard of have such an effect?
Over the past few years, DeepSeek has released several large language models, which is the kind of technology that underpins chatbots like ChatGPT and Gemini.
On Jan. 10, it released its first free chatbot app, which was based on a new model called DeepSeek-V3, that matched the abilities of the best chatbots from U.S. companies like OpenAI and Google.
That alone would have been impressive. But the team behind the new system also revealed a bigger step forward.
DeepSeek’s engineers said they needed only about 2,000 Nvidia chips, while the world’s top companies typically train their chatbots with supercomputers that use as many as 16,000 chips or more.
DeepSeek’s engineers said they needed only about $6 million in raw computing power to train their new system. That was roughly 10 times less than what Meta spent building its latest A.I. technology.
In short, the startup’s engineers demonstrated a more efficient way of analyzing data using the chips.
Moreover DeepSeek has “open sourced” its latest A.I. system, which means that it has shared the underlying computer code with other businesses and researchers. This allows others to build and distribute their own products using the same technologies.
This is part of the reason DeepSeek and others in China have been able to build competitive A.I. systems so quickly and inexpensively.
DeepSeek’s success appears to challenge the idea that the U.S. controls the AI industry. Concerns about this potential threat to U.S. dominance in the field appeared to be reflected on Wall Street on Monday, with major declines in the stock prices of tech giants like Nvidia, Meta and Google’s parent company, Alphabet.
If it’s China and not the United States determining the future of AI on the planet, I think that the stakes of that are just profound.
In the long run, that could put China at the heart of A.I. research and development, which could further accelerate its effort to build a wide range of A.I. technologies, including autonomous weapons and other military systems.