Chinese startup DeepSeek overtakes ChatGPT, shocks tech sector

Content

• Share price crash: DeepSeek's effect on the markets
• The technological advantage of DeepSeek
• Who's behind DeepSeek

This event has caused a stir in the tech industry, calling into question the dominance of US companies and the effectiveness of US export controls.

DeepSeek claims that their model was trained using Nvidia H800 chips at a cost of less than $6 million - significantly cheaper than the $100 million typically required by Western competitors.

Although the authenticity of this data is disputed, the mere possibility of creating a powerful model at a low cost has already forced American tech leaders to reconsider their views on AI investments.

Share price crash: DeepSeek's effect on the markets

Amid the news, shares of large tech companies plummeted. Nvidia lost 10 percent of its value, Oracle - 8 percent, Palantir - 7 percent.

Nasdaq 100 futures are down by 4 percent, which could lead to the biggest drop in the index since September 2022.

The effect of DeepSeek's exit was global: shares of AI companies fell not only in the US but also in Tokyo and Amsterdam. Investors are concerned that low-cost Chinese models may reduce the need for large investments, which have long been considered the standard for the industry.

Percentage drop in shares for the day (photo: Reuters)

The technological advantage of DeepSeek

The DeepSeek-V3 model, according to its creators, surpasses other open models and is almost equal to world-class closed models. Unlike its competitors, the startup was able to use less powerful Nvidia H800 chips, originally designed to circumvent US export sanctions, and still achieve impressive results.

This model was launched only on January 10, but it has already become a sensation, especially against the backdrop of restrictions that the US is imposing on the export of advanced technologies to China starting in 2021.

Who is behind DeepSeek

DeepSeek is a small Hangzhou-based startup founded in 2023. Despite its youth, the company has already changed the perception of Chinese technology on a global scale.

Since the release of the Baidu model in 2023, Chinese companies have been actively developing their own AI solutions, but it was DeepSeek that first attracted the attention of the American industry as a serious competitor.

Little is known about DeepSeek's future, but their breakthrough has already changed the landscape of the AI market, raising questions about the competitiveness of Western technologies and China's role in the global innovation race.

Stock dynamics as of May 2023 (photo: Reuters)

We also have an article on how to set up ChatGPT to work with verified information.

Sources: Reuters, Investor's Business Daily.