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Why America might be in DEEP S£$% due to DEEP SEEK…

But why, business leaders, might also be rather happy…

It was lovely to be asked to go on the radio and talk about this. As their AI and tech expert. As something extraordinary just happened. A Chinese AI startup, DeepSeek, managed to do in months what took OpenAI and Google years—develop a high-performing AI model at a fraction of the cost. With a reported budget of just $6 million, DeepSeek's latest model, DeepSeek-R1, is outperforming ChatGPT in app downloads and has triggered the biggest tech stock shake-up in recent history. Nvidia alone lost nearly $600 billion in market value, while the NASDAQ plunged before clawing back some losses.

What Just Happened?

DeepSeek, a relatively unknown name outside of China, has developed an AI model that delivers impressive performance without requiring the billions in GPU investment that companies like OpenAI, Microsoft, and Google have spent.

The model itself is openly available—unlike GPT-4—which has fueled excitement across the AI community. However, its rise has also triggered an intense geopolitical and economic debate. If China can produce cheaper, efficient AI models, what does this mean for the AI arms race, U.S. tech dominance, and future innovation?

Why DeepSeek Matters

  1. Price Disruption: AI models have been costly to train. OpenAI, Anthropic, and Google have spent billions on GPU infrastructure, assuming cost barriers would limit new entrants. DeepSeek just smashed that assumption.
  2. AI Accessibility: By making its model freely available, DeepSeek is lowering the cost of AI entry. This could accelerate AI adoption in industries that were previously priced out.
  3. Shaky Ground for Silicon Valley: Nvidia, OpenAI, and Google are now facing an unexpected competitor. The stock market panic shows investors fear that AI profitability may not be as predictable as once thought.
  4. Political & Ethical Concerns: Reports suggest DeepSeek follows strict censorship guidelines around politically sensitive topics like Tiananmen Square and Taiwan. This raises questions about AI governance—should the best AI models be built in environments where information is controlled?

What Does This Mean for Business Leaders?

1. AI Will Get Cheaper – Fast

If DeepSeek can build a powerful model for under $6M, expect AI cost curves to drop sharply. Companies currently paying hefty fees for enterprise AI solutions might soon find better, cheaper alternatives. This means reassessing AI budgets and watching new entrants beyond the usual Silicon Valley giants.

2. Geopolitics & AI Are Now Intertwined

The U.S. has imposed strict export controls on advanced Nvidia chips, yet DeepSeek still found a way to train its model. This means restrictions may not be enough to stop China’s AI progress. Businesses relying on U.S. AI models need to start thinking about supply chain resilience—particularly if AI becomes a geopolitical flashpoint.

3. Open vs. Closed AI – The Debate Is Heating Up

DeepSeek’s open release contrasts sharply with OpenAI’s increasingly closed models. If businesses have access to high-performing, freely available AI models, will they still pay for premium, black-box AI? This could push more companies toward open-source AI solutions, shifting industry dynamics.

4. AI Market Shake-Ups Will Continue

Tech stocks just had their worst day in years. But beyond the market panic, the real question is: Are AI valuations inflated? If a $6M model can compete with GPT-4, how much is a company like OpenAI really worth? This could trigger a broader reassessment of AI startup valuations and investment strategies.

What Happens Next?

Sam Altman, OpenAI’s CEO, acknowledged DeepSeek’s success, calling it “impressive.” That’s polite CEO-speak for “we’re paying very close attention.” But here’s what’s likely coming:

  • More Competition: If DeepSeek can do this, expect more startups to follow, bringing new models and pricing pressure.
  • Policy Responses: The U.S. may tighten chip restrictions or impose AI-specific sanctions, potentially forcing companies to rethink where and how they build AI.
  • Enterprise Adoption: Companies will start testing DeepSeek AI models, and if they deliver competitive performance, expect a shift away from current market leaders.

Final Thought: The AI Arms Race Just Got More Interesting

DeepSeek’s arrival is a wake-up call for Silicon Valley. The AI revolution won’t just be led by billion-dollar companies—and that’s both exciting and terrifying for incumbents.

For business leaders, the takeaway is simple: AI just got cheaper, more accessible, and more competitive. Are you ready?

Welcome to the Fifth Industrial Revoltion :)

References for the piece:

What is DeepSeek - and why is everyone talking about it? - BBC News

DeepSeek: Tech firm suffers biggest drop in US stock market history as low-cost Chinese AI company bites Silicon Valley | Money News | Sky News

DeepSeek AI's new models stun Silicon Valley and roil markets

Donald Trump warns Chinese AI app DeepSeek a 'wake-up call' for US tech firms - BBC News

DeepSeek hit by cyberattack as users flock to Chinese AI startup | Reuters

We tried out DeepSeek. It worked well, until we asked it about Tiananmen Square and Taiwan | DeepSeek | The Guardian

U.S. lawmakers in 'uncharted waters' as DeepSeek tests limits of American trade restrictions

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