Released on January 27th, by Chinese tech start-up, Deepseek, the company’s AI named “Deepseek,” sent shock waves through Silicon Valley, and caused American Chip Company, NVIDIA to lose a staggering $589 billion, 17% of its total valuation. Utilizing older Nvidia chip technology, the Chinese startup spent only $5.6 million to develop DeepSeek. NVIDIA profits heavily by selling GPUs, which are crucial in researching and developing AI. In 2024 alone the company made an estimated $66.7 billion by selling these advanced processors.
NVIDIA’s dominance in AI chips is a result of the tech industry’s dependence on GPUs for a variety of AI, coding, and technological development. NVIDIA produced the world’s best GPU processors vital for these operations, especially the advancement of cutting-edge AI, which in Silicon Valley’s eyes necessitated the creation of more modern and powerful chips. As a result of this belief, Deepseek’s launch caused the company’s stock to plummet because it shocked investors that cutting-edge AI, like Deepseek, could be developed and be compatible with old hardware. However, NVIDIA remains as the chief producer of GPUs.
Compared to its competitors, DeepSeek’s AI is stronger when performing specialized tasks that require a high degree of coding, and reasoning. Additionally, the AI performs well in dialogue-based applications, and is very low cost, making it the best option for business and individuals operating on a low budget. The program’s lower cost is ultimately its greatest strength as it is a cheap alternative to more advanced AI. Furthermore, Deepseek’s technology is completely open sourced, which means that anyone can modify the software, allowing for greater access and development of the system without forcing consumers to pay for further access. However, DeepSeek AI is outperformed by ChatGPT-4 in developer adoption and database variety, Claude 3, at mitigating biases, and logical reasoning in text responses, and by Gemeni 1.5 at integrating text with images and audio.
As the race for AI intensifies, Chinese corporations establish themselves as a growing threat to U.S. dominance and emerging power in the AI world. The advent of new and affordable AI programs, like Deepseek, is challenging the industry’s long reliance on cutting-edge technology from companies like NVIDIA. U.S. tech giants, like OpenAI and Google, will not only continue existing projects but possibly branch into cheaper alternatives to compete with DeepSeek and other Chinese AI programs.
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