China’s DeepSeek AI is creating waves worldwide and wrecking havoc across the global tech sector, sparking comparisons to a “Sputnik moment” in artificial intelligence. Just as the Soviet Union’s launch of Sputnik, the world’s first satellite, reshaped the global space race in 1957, DeepSeek AI is set to redefine the future of advanced technology, machine intelligence and human innovation.
The revolutionary new Chinese artificial intelligence large language models (LLMs), V3 and R1, which were launched on 20 January have been developed by a relatively unknown and small startup called DeepSeek, which was founded in Hangzhou, eastern China in 2023 by Liang Wenfeng, the 40 year old CEO of Chinese hedge fund High-Flyer. The R1 LLM has now been popularly dubbed ‘DeepSeek AI’ and is being praised globally for its cutting-edge capabilities, putting it in league with the acclaimed American AI chatbot ChatGPT, but with one key advantage – DeepSeek AI is completely free for anyone and everyone to use.
What makes DeepSeek’s breakthrough even more impressive is that it is said to have been built on a relatively modest budget of US $6 million and with only 2,000 Nvidia H800 chips — a fraction of the resources global AI giants like OpenAI, Google and Meta typically require. While no global media outlet has yet been able to independently verify that less data and cheaper chips have indeed been used to build DeepSeek’s revolutionary R1 model, what has become clear is that the launch of this Chinese AI chatbot has raised questions about American dominance in AI as well as the logic of pouring hundreds of billions of dollars into developing advanced artificial intelligence, when one can do more with less money.
Until a few days ago, it was assumed that most advanced AI systems demanded an investment of billions of dollars and thousands of top-tier chips, a norm that DeepSeek has broken, with its achievements proving that innovation isn’t always tied to massive investments.
This is why the launch of DeepSeek AI has sent shockwaves through global markets. Major tech companies, including Nvidia, Microsoft and Alphabet, have experienced dramatic drops in their stock values, with over US $1 trillion collectively wiped off from their market capitalisations. This severe reaction highlights the disruptive potential of DeepSeek AI and raises questions about the future dominance of established tech giants.
DeepSeek has already unseated America’s ChatGPT, to become the most downloaded AI chatbot in Apple’s U.S. app store. What truly sets DeepSeek apart is its open-source approach. By making its AI model accessible to developers and researchers worldwide, the company encourages collaboration and accelerates innovation across borders. This strategy could democratize AI development, allowing smaller players to enter the race and push the boundaries of what AI can achieve.
Experts believe DeepSeek AI could transform industries ranging from healthcare to finance, while also fostering breakthroughs in robotics, natural language processing, and beyond. Its success is forcing governments and companies around the world to rethink their strategies, signalling the beginning of a new era in artificial intelligence.
However DeepSeek AI also suffers from several drawbacks such as Chinese censorship, with no results being generated on subjects deemed ‘sensitive’ to the Chinese Communist Party such as Hong Kong and Taiwan, as well as the fact that any and all user data entered into the DeepSeek app is transferred to China in realtime and stored in servers located there, raising several privacy concerns for people around the world.
In the larger context, DeepSeek AI’s launch also exposes the limits of US efforts to restrict China’s access to advanced AI chips. Despite sanctions, China has demonstrated that it can innovate and compete on a global scale. The rise of DeepSeek suggests that hardware restrictions alone cannot prevent technological progress. Both US and China, the two big AI superpowers, have announced plans to invest billions into AI infrastructure, with the competition to dominate the AI space turning into an all out arms race.
In this geopolitical reality, what DeepSeek AI has accomplished isn’t just a technological breakthrough—it’s a wake-up call for the world. It reminds us that innovation knows no borders, and the future of AI is being shaped by those willing to think differently. The ripple effects of DeepSeek’s emergence will likely influence global tech and policy for years to come.
The AI arms race is here.
