China's DeepSeek Shocks American AI Firms

DeepSeek rivals ChatGPT and Gemini in its AI capabilities

Today the biggest business news was Nvidia's stock going free fall because of a little known Chinese artificial intelligence start-up called DeepSeek.

Investors dumped Nvidia's stock when they found out DeepSeek had similar capabilities to OpenAI's ChatGPT and Google's Gemini -- but by using a fraction of the microchips, which means much cheaper and faster than US AI firms. Typically top companies train their supercomputers to use some 16,000 microchips or more; DeepSeek claims it only needed about 2,000.

Nvidia's stock plunged today on DeepSeek news

That sent alarm bells ringing. Loudly.

The Biden administration had limited the number of microchips China could buy in a bid to keep American companies in the lead when it comes to developing AI technology. But with its back against the wall, China's top programmers figured out a way to get more out of each microchip.

There are claims DeepSeek only spent about US$6 million on developing its AI technology, but skeptics think the amount is higher. 

Nevertheless, the inability of the Chinese to get their hands on more microchips is hindering its high tech development, as DeepSeek founder and entrepreneur, Liang Wenfeng told Chinese Premier Li Qiang last week that access to advanced chips was a bottleneck.

While US investors recover from their shock, rival programmers will be going through DeepSeek, as all of its work is open sourced, which means its coding is available for use, or to scrutinise as proof of what they have done.

DeepSeek founder Liang Wenfeng

In the meantime, US tech giants may be asking President Donald Trump for more controls on China. Today he said it was a "wake-up call" for the American tech industry.

Not only was DeepSeek on everyone's lips, but phones as well, as it was the most downloaded app in the last few days at over 1.6 million.