China's New AI Model Threatens US Dominance

A Chinese artificial intelligence startup has sent shock waves throughout Silicon Valley and appears to threaten U.S. AI dominance.

DeepSeek, little more than a year old, launched an AI model that offers comparable performance to the world's best chatbots at seemingly a fraction of the cost, Bloomberg reported.

Major U.S. technology stocks — including Nvidia, Microsoft, and Tesla — lost a colossal $1 trillion market cap Monday on fears of disruption from DeepSeek.

The fact the startup's ChatGPT-like AI model R1 can outperform America's best despite being built more cheaply and with less-powerful chips raised alarms on whether the U.S.'s global lead in artificial intelligence is shrinking.

The Chinese model also has called into question Big Tech's massive spend on building AI models and data centers, CNBC reported.

"To see the DeepSeek new model, it's super impressive in terms of both how they have really effectively done an open-source model that does this inference-time compute, and is super-compute efficient," Microsoft CEO Satya Nadella said Wednesday at the World Economic Forum in Davos, Switzerland, CNBC reported.

"We should take the developments out of China very, very seriously."

With the Biden administration's chip export curbs failing to stop China's technology advancement, Congress may try to figure out how to thwart Beijing, which greatly relies on technology for its military and economy.

It appears DeepSeek either found a way to work around the rules, or that the export controls were not enough of a restriction.

President Donald Trump said the emergence of R1 was a "wake-up call" for Silicon Valley.

David Sacks, Trump's crypto and AI czar, blamed the Biden administration for regulation that "hamstrung" AI development.

"DeepSeek R1 shows that the AI race will be very competitive and that President Trump was right to rescind the Biden EO, which hamstrung American AI companies without asking whether China would do the same. (Obviously not.) I'm confident in the U.S. but we can't be complacent," Sacks posted on X.

Two days after taking office, Trump talked up a joint venture investing up to $500 billion for infrastructure tied to artificial intelligence by a new partnership formed by OpenAI, Oracle, and SoftBank.

• Nvidia: DeepSeek Advances Prove Need for More of Its Chips
• DeepSeek Hit by Outages as Users Flock to Startup