Tue Jan 28 07:40:00 UTC 2025: ## Chinese AI Startup DeepSeek Shakes Up US Tech Market

**HONG KONG –** A Chinese AI startup, DeepSeek, has sent shockwaves through the US tech industry, causing a significant drop in the market value of major American tech companies. DeepSeek’s open-source AI model, developed for a mere $6 million, reportedly undercuts comparable US models by hundreds of billions of dollars.

This dramatic cost difference has sparked investor concerns about the profitability of US AI companies and triggered a decline in the stock prices of related firms, including those in the energy sector.

However, US President Donald Trump offered a surprisingly positive assessment, stating that DeepSeek’s success could ultimately benefit the US tech sector. He argued that the lower cost of Chinese AI should motivate American companies to become more efficient and competitive.

“This is a good thing because we don’t have to spend so much money,” Trump stated during a Florida press conference. He emphasized the high caliber of American scientists and their potential to match or surpass DeepSeek’s achievements. “We always have the ideas. We always lead. So, I think this is a positive, potentially a very positive development,” he added.

Despite the market downturn, Nvidia, a major supplier of AI chips, expressed confidence, noting that the reaction to DeepSeek indicates continued demand for their chips in China. DeepSeek reportedly used approximately 2,000 of Nvidia’s H800 chips—a model designed to comply with US export controls—in its AI model. Nvidia highlighted the increased need for its chips to support the inference (user service) stage of DeepSeek’s AI.

Experts are divided. Jimmy Goodrich, a senior advisor at RAND Corp., pointed out that numerous Chinese supercomputers legally utilize Nvidia chips, though US export controls limit their use in AI training. He noted that Nvidia’s H20 chip, designed for inference, may be the world’s best, raising concerns about the longevity of its export permit.

Yann LeCun, Meta’s chief AI scientist, praised DeepSeek’s open-source approach, highlighting its benefits to the broader research community. The remarkable success of DeepSeek’s comparatively inexpensive AI is forcing a reconsideration of the massive funding currently poured into US AI research and development.

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