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Technology

Demystifying AI

DeepSeek has launched a wave of AI democratisation in the Chinese economy and on a global stage.

By Dr M Ali Hamza | April 2025


“The launch of DeepSeek by a Chinese AI company should serve as a wake-up call,” stated President Donald Trump, referring to the AI development that has truly rattled the world. American tech firms and the US stock market have been so shaken that they could never have anticipated such an impact. Before delving into President Trump’s comments, let’s first take a look at some background information.

On January 20, 2025, a Chinese research lab introduced its AI chatbot, DeepSeek R1, alongside a research paper claiming it outperforms the world’s most advanced chatbots in benchmarks like math and reasoning. This includes OpenAI’s ChatGPT o1 model, Meta’s Llama, and Google’s Gemini Advanced. DeepSeek stands out for its efficiency, requiring only a fraction of the time and cost to develop. Most remarkably, it is completely free for everyone to use.

The development of DeepSeek, built on Chain of Thought and Advanced Reasoning Models, is credited to 40-year-old Chinese entrepreneur Liang Wenfeng and his team of 200, 95% of whom are under 30. In contrast, OpenAI operates with a workforce of over 3,500 employees. DeepSeek is the only Chinese AI company with no funding from major tech giants like Baidu, Alibaba, or ByteDance.

A while back, when OpenAI’s founder Sam Altman was asked whether foundational AI models like ChatGPT could be developed by others with less investment, he responded with confidence, even arrogance, saying, “People can try, but it’s totally hopeless to compete with us in training foundational models. You can try, and it’s your job to try anyway.” Today, Sam Altman might be the one feeling hopeless. Just a week after DeepSeek’s launch, it became the most downloaded app in the U.S. on both the App Store and Google Play Store. By January 27, it had already shaken the American financial markets, unsettled investors, and wiped out a staggering $1 trillion from the U.S. tech index.

Before DeepSeek’s launch, NVIDIA was the world’s most valuable company, with a market valuation of $3.5 trillion. However, its value plummeted to $2.9 trillion in just one day. As a leading manufacturer of computer chips essential for training and operating AI, NVIDIA’s stock tumbled 17%, erasing $600 billion from its valuation, marking the largest single-day loss suffered by any company in recent history. Business loss may be a significant reason for Donald Trump’s concern, but it’s certainly not the only one.

Why did NVIDIA experience such a massive loss? Here’s the story. In 2022, the US government imposed export restrictions on computer chips to prevent other countries, particularly Chinese AI companies, from accessing the advanced computer chips required for AI training. This included NVIDIA’s H100 chips, the most powerful GPU chip on the market and designed specifically for artificial intelligence (AI) applications, which Chinese tech companies were barred from purchasing.


This posed a challenge for DeepSeek, as they had to rely on NVIDIA’s older chips to train their AI models. The US government attempted to maintain its dominance in Foundational AI by restricting access to the necessary chips, aiming to prevent other countries from developing competing models. As a result, the DeepSeek team was forced to innovate. They developed software that requires only a fraction of the resources while operating far more efficiently at a significantly lower cost. This is why NVIDIA’s stock took the hardest hit. Just months ago, companies like Meta, OpenAI, and Google insisted that scaling AI to higher levels would demand more chips, energy, and money. However, DeepSeek has achieved the same—using less money, energy, and outdated chips.

DeepSeek’s AI model has achieved exceptional performance at a fraction of the cost compared to its American counterparts. This breakthrough challenges the widely held belief that massive investments in data centres and advanced chips are necessary to develop cutting-edge AI. This could be another reason President Trump openly sees DeepSeek as a threat because it has directly challenged the US’s tech hegemony.
In addition to the reasons mentioned, other factors could have prompted President Trump to voice his concerns. One possibility is that DeepSeek’s AI capabilities could be used to further China’s strategic interests, potentially jeopardizing U.S. national security. The fear is that such technologies might be exploited for cyber-attacks, espionage, or spreading misinformation, posing a significant threat to the United States.

Furthermore, the launch of DeepSeek’s AI model has significantly impacted global financial markets. Major tech companies, including Nvidia, Microsoft, and Alphabet, saw notable declines in their stock prices, reflecting investor concerns about the competitive threat posed by DeepSeek. This market response highlights the perceived challenge to the dominance of US-based AI leaders, which could undermine Trump’s “Make America Great Again” slogan.

In short, whether you see DeepSeek as a threat or smart innovation, it has already launched a wave of AI democratisation in the Chinese economy and on a global stage. Coupled with China’s industrial capabilities, this will boost the competitiveness of the country’s products on the world stage. The process is underway, and its impact could significantly influence how people live and work for years to come.

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