Chinese artificial intelligence (AI) start-up DeepSeek’s (深度求索) eponymous AI assistant rocketed to the top of Apple Inc’s iPhone download charts, stirring doubts in Silicon Valley about the strength of the US’ technological dominance.
The app’s underlying AI model is widely seen as competitive with OpenAI and Meta Platforms Inc’s latest.
Its claim that it cost much less to train and develop triggered share moves across Asia’s supply chain.
Photo: AFP
Chinese tech firms linked to DeepSeek, such as Iflytek Co (科大訊飛), surged yesterday, while chipmaking tool makers like Advantest Corp slumped on the potential threat to demand for Nvidia Corp’s AI accelerators.
US stock index futures also tumbled amid concerns that DeepSeek’s AI models might disrupt US technological leadership. Markets were closed for holidays in Taiwan and South Korea.
Lauded by investor Marc Andreessen as “one of the most amazing and impressive breakthroughs,” DeepSeek’s assistant shows its work and reasoning as it addresses a user’s written query or prompt.
Reviews on Apple’s app store and Alphabet Inc’s Android Play Store praised that transparency.
The app topped the free downloads chart on iPhones in the US and is among the most downloaded productivity apps in the Play Store.
“DeepSeek shows that it is possible to develop powerful AI models that cost less,” Union Bancaire Privee SA managing director Ling Vey-sern (凌煒森) said. “It can potentially derail the investment case for the entire AI supply chain, which is driven by high spending from a small handful of hyperscalers.”
Founded by quant fund chief Liang Wenfeng (梁文鋒), DeepSeek’s open-sourced AI model is spurring a rethink of the billions of dollars that companies have been spending to stay ahead in the AI race.
“While it remains to be seen if DeepSeek will prove to be a viable, cheaper alternative in the long term, initial worries are centered on whether US tech giants’ pricing power is being threatened and if their massive AI spending needs re-evaluation,” IG Asia Pte market strategist Yeap Jun Rong (葉俊榮) said.
Like all other Chinese-made AI models, DeepSeek self-censors on topics deemed politically sensitive in China. Unlike ChatGPT, DeepSeek deflects questions about Tiananmen Square, Chinese President Xi Jinping (習近平) or the possibility of China invading Taiwan. That might prove jarring to international users, who may not have come into direct contact with Chinese chatbots earlier.
The initial success provides a counterpoint to expectations that the most advanced AI would require increasing amounts of computing power and energy — an assumption that has driven shares in Nvidia and its suppliers to all-time highs.
The exact cost of development and energy consumption of DeepSeek are not fully documented, but the start-up has presented figures that suggest its cost was only a fraction of OpenAI’s latest models.
The DeepSeek product “is deeply problematic for the thesis that the significant capital expenditure and operating expenses that Silicon Valley has incurred is the most appropriate way to approach the AI trend,’ said Nirgunan Tiruchelvam, head of consumer and internet at Singapore-based Aletheia Capital. “It calls into question the massive resources that have been dedicated to AI.”
That a small and efficient AI model emerged from China, which has been subject to escalating US trade sanctions on advanced Nvidia chips, is also challenging the effectiveness of such measures.
“The US is great at research and innovation and especially breakthrough, but China is better at engineering,” computer scientist Lee Kai-fu (李開復) said earlier this month at the Asian Financial Forum in Hong Kong.
“In this day and age, when you have limited compute power and money, you learn how to build things very efficiently,” he said.
EARLY TALKS: Measures under consideration include convincing allies to match US curbs, further restricting exports of AI chips or GPUs, and blocking Chinese investments US President Donald Trump’s administration is sketching out tougher versions of US semiconductor curbs and pressuring key allies to escalate their restrictions on China’s chip industry, an early indication the new US president plans to expand efforts that began under former US president Joe Biden to limit Beijing’s technological prowess. Trump officials recently met with their Japanese and Dutch counterparts about restricting Tokyo Electron Ltd and ASML Holding NV engineers from maintaining semiconductor gear in China, people familiar with the matter said. The aim, which was also a priority for Biden, is to see key allies match China curbs the US
The popular Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) arbitrage trade might soon see a change in dynamics that could affect the trading of the US listing versus the local one. And for anyone who wants to monetize the elevated premium, Goldman Sachs Group Inc highlights potential trades. A note from the bank’s sales desk published on Friday said that demand for TSMC’s Taipei-traded stock could rise as Taiwan’s regulator is considering an amendment to local exchange-traded funds’ (ETFs) ownership. The changes, which could come in the first half of this year, could push up the current 30 percent single-stock weight limit
NOT TO WORRY: Some people are concerned funds might continue moving out of the country, but the central bank said financial account outflows are not unusual in Taiwan Taiwan’s outbound investments hit a new high last year due to investments made by contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and other major manufacturers to boost global expansion, the central bank said on Thursday. The net increase in outbound investments last year reached a record US$21.05 billion, while the net increase in outbound investments by Taiwanese residents reached a record US$31.98 billion, central bank data showed. Chen Fei-wen (陳斐紋), deputy director of the central bank’s Department of Economic Research, said the increase was largely due to TSMC’s efforts to expand production in the US and Japan. Investments by Vanguard International
‘SACRED MOUNTAIN’: The chipmaker can form joint ventures abroad, except in China, but like other firms, it needs government approval for large investments Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) needs government permission for any overseas joint ventures (JVs), but there are no restrictions on making the most advanced chips overseas other than for China, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. US media have said that TSMC, the world’s largest contract chipmaker and a major supplier to companies such as Apple Inc and Nvidia Corp, has been in talks for a stake in Intel Corp. Neither company has confirmed the talks, but US President Donald Trump has accused Taiwan of taking away the US’ semiconductor business and said he wants the industry back
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