By Paul Wallis
January 28, 2025
DIGITAL JOURNAL
Chinese firm DeepSeek's artificial intelligence chatbot has soared to the top of the Apple US App Store's download charts, stunning industry insiders and analysts with its ability to match its US competitors - Copyright AFP
For all the hype, babble, and actual achievements, America’s new cash cow AI has just had a jolt of very expensive reality. Despite the Stargate Project, designed to maintain America’s edge in AI, China’s DeepSeek has just punctured the balloon.
Somehow, no doubt in a flurry of macho meetings for tiresome rodents, the idea of American exclusivity in AI was taken seriously. No form of tech is exclusive and never has been. Fire and the wheel are good examples.
There are hordes of AI businesses trying to create a space for themselves in this market. The highly publicized variety of AI is nothing like the whole story. The next generation of AI hardware is also up for grabs.
Then there’s theft. China is the bogeyman, but does anyone have the inbuilt level of extraordinary stupidity required to believe that nobody else is swiping AI tech?
Tech media has been saying for a long time that the hype has been out of control in the investment markets. Billions of dollars have found obliging rabbit holes in this techno-mythology.
DeepSeek also had the market perceptiveness to bring some credentials with it. DeepSeek is an actual open source AI. It’s also affordable and pretty cheap. Current gossip is that it’s better for technical tasks, while ChatGPT is more chatty… hard to avoid that analogy because it’s a better chatbot.
The markets, meanwhile, had a demure fit. Nvidia, long said to be due for a major correction, corrected itself and accounted for most of the $1 trillion downward move. Other tech stocks were also hit, and tech indices must be feeling pretty queasy, too.
This undignified stampede caused by the mere presence of a credible competitor has a much deadlier if almost too obvious message.
This is a true global market.
America is not the only player.
Big money wants returns.
Investments in AI must deliver hard dollar values.
Another good idea is not bleating about the cost of AI processes and doing something useful, like making them market-ready and cheaper.
One of the reasons for the instant and ongoing extreme skepticism in the tech sector is that this drivel been hyping the wrong things. The chat-related functions are all just large language models hooked up to old software ideas and chatbots. The market has been seeing what it wants to see, as usual.
You can write an essay based on a search, sure. So what? This is almost literally playing with alphabet blocks in kindergarten at a cost of billions of dollars.
The next generation of AI will make a big leap in capabilities. From what I’ve seen, AI analytics are generally pretty good. I have also caught a few indicators of bias. I’d have to see a lot more and cross-check to spend a cent on any of it, but OK-ish.
For example – AI peer review is an interesting option. How does an AI oversight another AI? Does that add a level of difficulty that an AI will respect? If you tell an AI its work will be checked, does it behave differently?
I mention this because the market doesn’t seem to know what constitutes good performance by AI. That’s the incredible weakness DeepSeek has just exposed.
You’re not buying an iPhone, an air fryer, or some showy peripheral.
You’re buying a lot of money’s worth of something, and you don’t know what? Fix that.
__________________________________________________
Disclaimer
The opinions expressed in this Op-Ed are those of the author. They do not purport to reflect the opinions or views of the Digital Journal or its members.
DeepSeek’s ‘Sputnik moment’ exposes holes in US chip curbs
By AFP
January 29, 2025
DeepSeek has stunned investors and industry insiders with its new chatbot
By AFP
January 29, 2025
DeepSeek has stunned investors and industry insiders with its new chatbot
- Copyright AFP PETER CATTERALL
Oliver HOTHAM
US export controls on high-tech chips may have inadvertently fuelled the success of start-up DeepSeek’s AI chatbot, sparking fears in Washington there could be little it can do to stop China in the push for global dominance in AI.
The firm, based in the eastern Chinese city of Hangzhou, has stunned investors and industry insiders with its R1 programme, which can match its American competitors seemingly at a fraction of the cost.
That’s despite a strict US regime prohibiting Chinese firms from accessing the kinds of advanced chips needed to power the massive learning models used to develop AI.
DeepSeek founder Liang Wenfeng has admitted the “embargo on high-end chips” has proved a major hurdle in its work.
But while the curbs have long aimed to ensure US tech dominance, analysts suggest they may have spurred the firm to develop clever ways to overcome them.
The company has said it used the less-advanced H800 chips — permitted for export to China until late 2023 — to power its large learning model.
“The constraints on China’s access to chips forced the DeepSeek team to train more efficient models that could still be competitive without huge compute training costs,” George Washington University’s Jeffrey Ding told AFP.
The success of DeepSeek, he said, showed “US export controls are ineffective at preventing other countries from developing frontier models”.
“History tells us it is impossible to bottle up a general-purpose technology like artificial intelligence.”
DeepSeek is far from the first Chinese firm forced to innovate in this way: tech giant Huawei has roared back into profit in recent years after reorienting its business to address US sanctions.
But it is the first to spark such panic in Silicon Valley and Washington.
Venture capitalist Marc Andreessen described it as a “Sputnik moment” — a reference to the Soviet satellite launch that exposed the yawning technology gap between the United States and its primary geopolitical adversary.
– Fraction of the cost –
For years many had assumed US supremacy in AI was a given, with the field dominated by big Silicon Valley names like OpenAI and Facebook-parent Meta.
While China has invested millions and vowed to be the world leader in AI technology by 2030, its offerings were hardly enough to raise hackles across the Pacific.
Tech giant Baidu’s attempt at matching ChatGPT, Ernie Bot, failed to impress on release — seemingly confirming views among many that Beijing’s stifling regulatory environment for big tech would prevent any real innovation.
That was combined with a tough regime, spearheaded by the administration of Joe Biden, aimed at limiting Chinese purchases of the high-tech chips needed to power AI large language models.
But DeepSeek has blown many of those ideas out of the water.
“It’s overturned the long-held assumptions that many had about the computation power, the data processing that’s required to innovate,” Samm Sacks, a Research Scholar in Law and Senior Fellow at Yale Law School’s Paul Tsai China Center, told AFP.
“And so the question is can we get cutting-edge AI at a fraction of the cost and a fraction of the computation?”
While DeepSeek’s model emphasised cost-cutting and efficiency, American policy towards AI has long been based on assumptions about scale.
“Throw more and more computing power and performance at the problem to achieve better and better performance,” according to George Washington University’s Ding.
That’s the central idea behind President Donald Trump’s Stargate venture, a $500 billion initiative to build infrastructure for artificial intelligence led by Japanese giant SoftBank and ChatGPT-maker OpenAI.
But the success of DeepSeek’s R1 chatbot — which its developers claim was built for just $5.6 million — suggest innovation can come much cheaper.
Some urge caution, stressing the firm’s cost-saving measures might not be quite so innovative.
“DeepSeek V3’s training costs, while competitive, fall within historical efficiency trends,” Lennart Heim, an associate information scientist at the RAND Corporation, told AFP, referring to R1’s previous iteration.
“AI models have consistently become cheaper to train over time — this isn’t new,” he explained.
“We also don’t see the full cost picture of infrastructure, research, and development.”
– ‘Wake-up call’ –
Nevertheless, Trump has described DeepSeek as a “wake-up call” for Silicon Valley that they needed to be “laser-focused on competing to win”.
Former US Representative Mark Kennedy told AFP that DeepSeek’s success “does not undermine the effectiveness of export controls moving forward”.
Washington could choose to fire the next salvo by “expanding restrictions on AI chips” and increased oversight of precisely what technology Chinese firms can access, he added.
But it could also look to bolster its own industry, said Kennedy, who is now Director of the Wilson Center’s Wahba Institute for Strategic Competition.
“Given the limitations of purely defensive measures, it may also ramp up domestic AI investment, strengthen alliances, and refine policies to ensure it maintains leadership without unintentionally driving more nations toward China’s AI ecosystem,” he said.
Rebecca Arcesati, an analyst at Mercator Institute for China Studies (MERICS), told AFP “the very real fear of falling behind China could now catalyse that push”.
Oliver HOTHAM
US export controls on high-tech chips may have inadvertently fuelled the success of start-up DeepSeek’s AI chatbot, sparking fears in Washington there could be little it can do to stop China in the push for global dominance in AI.
The firm, based in the eastern Chinese city of Hangzhou, has stunned investors and industry insiders with its R1 programme, which can match its American competitors seemingly at a fraction of the cost.
That’s despite a strict US regime prohibiting Chinese firms from accessing the kinds of advanced chips needed to power the massive learning models used to develop AI.
DeepSeek founder Liang Wenfeng has admitted the “embargo on high-end chips” has proved a major hurdle in its work.
But while the curbs have long aimed to ensure US tech dominance, analysts suggest they may have spurred the firm to develop clever ways to overcome them.
The company has said it used the less-advanced H800 chips — permitted for export to China until late 2023 — to power its large learning model.
“The constraints on China’s access to chips forced the DeepSeek team to train more efficient models that could still be competitive without huge compute training costs,” George Washington University’s Jeffrey Ding told AFP.
The success of DeepSeek, he said, showed “US export controls are ineffective at preventing other countries from developing frontier models”.
“History tells us it is impossible to bottle up a general-purpose technology like artificial intelligence.”
DeepSeek is far from the first Chinese firm forced to innovate in this way: tech giant Huawei has roared back into profit in recent years after reorienting its business to address US sanctions.
But it is the first to spark such panic in Silicon Valley and Washington.
Venture capitalist Marc Andreessen described it as a “Sputnik moment” — a reference to the Soviet satellite launch that exposed the yawning technology gap between the United States and its primary geopolitical adversary.
– Fraction of the cost –
For years many had assumed US supremacy in AI was a given, with the field dominated by big Silicon Valley names like OpenAI and Facebook-parent Meta.
While China has invested millions and vowed to be the world leader in AI technology by 2030, its offerings were hardly enough to raise hackles across the Pacific.
Tech giant Baidu’s attempt at matching ChatGPT, Ernie Bot, failed to impress on release — seemingly confirming views among many that Beijing’s stifling regulatory environment for big tech would prevent any real innovation.
That was combined with a tough regime, spearheaded by the administration of Joe Biden, aimed at limiting Chinese purchases of the high-tech chips needed to power AI large language models.
But DeepSeek has blown many of those ideas out of the water.
“It’s overturned the long-held assumptions that many had about the computation power, the data processing that’s required to innovate,” Samm Sacks, a Research Scholar in Law and Senior Fellow at Yale Law School’s Paul Tsai China Center, told AFP.
“And so the question is can we get cutting-edge AI at a fraction of the cost and a fraction of the computation?”
While DeepSeek’s model emphasised cost-cutting and efficiency, American policy towards AI has long been based on assumptions about scale.
“Throw more and more computing power and performance at the problem to achieve better and better performance,” according to George Washington University’s Ding.
That’s the central idea behind President Donald Trump’s Stargate venture, a $500 billion initiative to build infrastructure for artificial intelligence led by Japanese giant SoftBank and ChatGPT-maker OpenAI.
But the success of DeepSeek’s R1 chatbot — which its developers claim was built for just $5.6 million — suggest innovation can come much cheaper.
Some urge caution, stressing the firm’s cost-saving measures might not be quite so innovative.
“DeepSeek V3’s training costs, while competitive, fall within historical efficiency trends,” Lennart Heim, an associate information scientist at the RAND Corporation, told AFP, referring to R1’s previous iteration.
“AI models have consistently become cheaper to train over time — this isn’t new,” he explained.
“We also don’t see the full cost picture of infrastructure, research, and development.”
– ‘Wake-up call’ –
Nevertheless, Trump has described DeepSeek as a “wake-up call” for Silicon Valley that they needed to be “laser-focused on competing to win”.
Former US Representative Mark Kennedy told AFP that DeepSeek’s success “does not undermine the effectiveness of export controls moving forward”.
Washington could choose to fire the next salvo by “expanding restrictions on AI chips” and increased oversight of precisely what technology Chinese firms can access, he added.
But it could also look to bolster its own industry, said Kennedy, who is now Director of the Wilson Center’s Wahba Institute for Strategic Competition.
“Given the limitations of purely defensive measures, it may also ramp up domestic AI investment, strengthen alliances, and refine policies to ensure it maintains leadership without unintentionally driving more nations toward China’s AI ecosystem,” he said.
Rebecca Arcesati, an analyst at Mercator Institute for China Studies (MERICS), told AFP “the very real fear of falling behind China could now catalyse that push”.
Upstart DeepSeek faces heightened scrutiny as AI wows
By AFP
January 29, 2025
After surging ahead in the global AI race this week, DeepSeek faces an uncertain future in China, its home country - Copyright AFP Mladen ANTONOV
Peter CATTERALL
With around six million dollars and a stockpile of chips acquired before Washington banned their export to China, startup DeepSeek has produced what Chinese tech titans couldn’t — a world-class AI chatbot.
The success will come with heightened scrutiny, both from Western governments with long-held suspicions about Chinese technology but also from Beijing, whose stern regulatory crackdown on the sector, though eased in 2022, still has a chilling effect.
After surging ahead in the global artificial intelligence race this week, DeepSeek faces an uncertain future in its home country.
In 2020, Beijing unleashed a severe regulatory campaign against China’s sprawling tech sector, which officials feared was growing beyond its control.
The crackdown saw authorities intensify local compliance efforts and slap eye-watering fines on domestic champions including Alibaba and Tencent for alleged monopolistic behaviour.
Beijing finally relented after a dire sell-off of Chinese tech stocks in March 2022.
But the sector has yet to find its way back to the flourishing growth of its boom years.
And China’s leaders have since stressed their desire for the country to become a world AI leader, pumping huge sums into a fund set up last year to help firms develop advanced computer chips in response to US shipment curbs.
Meanwhile, tech giants — including TikTok parent company ByteDance and internet search and cloud computing giant Baidu — have raced to develop an AI chatbot on par with ChatGPT, released by US-based OpenAI in 2022.
– No subsidies –
But in the end, it was the low-key hedge fund project DeepSeek that accomplished the feat, outstripping domestic juggernauts and triggering a Wall Street rout that wiped over half a trillion dollars off of US chip titan Nvidia’s market capitalisation.
“It is interesting that this breakthrough was achieved not by government-backed research institutes and large (state-owned enterprises), but by a hedge fund with no government subsidies,” noted Zhiwei Zhang, president and chief economist at Pinpoint Asset Management.
Beijing is unlikely to be discouraged, however, with Zhang adding that DeepSeek’s success “will likely motivate the government to further promote technological innovation by the private sector”.
The road ahead for DeepSeek will also feature major challenges overseas, with calls mounting for US authorities to act more urgently to prevent the flow of advanced chips to Chinese firms.
And with President Donald Trump vowing to impose blanket tariffs on China in coming weeks for its alleged role in the US fentanyl crisis as well as “unfair” trade practices, a relaxation of curbs on advanced chip exports appears unlikely.
Beijing’s policy is also increasingly driven by national security concerns — with President Xi Jinping remarking in a speech this week that the country had faced “complex and severe situations” throughout the past year.
Despite growing fears of an intensified trade war, DeepSeek surged to the top of Apple’s App Store download charts this week as curious consumers flocked to test it.
– TikTok fate? –
The firm’s growing user base overseas may lead to fresh challenges stemming from Western governments’ long-standing concerns about the Chinese government’s potential espionage via locally developed apps, as well as heavy state censorship of content deemed by Beijing to be undesirable.
Authorities in the country have in recent years rolled out new regulations for the burgeoning field of generative AI, ensuring that content it produces aligns with Beijing’s official narrative on sensitive issues such as the status of Taiwan or alleged human rights abuses.
In addition to screening out obscenity and encouragement of violence, Chinese chatbots are required to adhere to the government’s “core socialist values” — a decree regulators say is to promote “social stability”.
Another potential pitfall in DeepSeek’s quest to become the global go-to chatbot is how it handles the personal information of its users.
The potential ban of TikTok in the United States is fuelled in large part by concerns that user data stored on servers owned by a China-based company poses a major national security risk.
“DeepSeek’s cost efficiency is praiseworthy, but the privacy implications of its data collection would raise significant concerns,” said Saeed Rehman, senior lecturer in cybersecurity and networking at Flinders University.
“This situation may evoke similar concerns to those raised for TikTok, where data privacy and security have been hotly debated,” he said.
DeepSeek — whose founder Liang Wenfeng once said he became convinced as a student that AI would “change the world” — arrived on the world stage this week with a clamour.
How long it stays on top will depend on how it manages the litany of potential perils that lie in its path.
By AFP
January 29, 2025
After surging ahead in the global AI race this week, DeepSeek faces an uncertain future in China, its home country - Copyright AFP Mladen ANTONOV
Peter CATTERALL
With around six million dollars and a stockpile of chips acquired before Washington banned their export to China, startup DeepSeek has produced what Chinese tech titans couldn’t — a world-class AI chatbot.
The success will come with heightened scrutiny, both from Western governments with long-held suspicions about Chinese technology but also from Beijing, whose stern regulatory crackdown on the sector, though eased in 2022, still has a chilling effect.
After surging ahead in the global artificial intelligence race this week, DeepSeek faces an uncertain future in its home country.
In 2020, Beijing unleashed a severe regulatory campaign against China’s sprawling tech sector, which officials feared was growing beyond its control.
The crackdown saw authorities intensify local compliance efforts and slap eye-watering fines on domestic champions including Alibaba and Tencent for alleged monopolistic behaviour.
Beijing finally relented after a dire sell-off of Chinese tech stocks in March 2022.
But the sector has yet to find its way back to the flourishing growth of its boom years.
And China’s leaders have since stressed their desire for the country to become a world AI leader, pumping huge sums into a fund set up last year to help firms develop advanced computer chips in response to US shipment curbs.
Meanwhile, tech giants — including TikTok parent company ByteDance and internet search and cloud computing giant Baidu — have raced to develop an AI chatbot on par with ChatGPT, released by US-based OpenAI in 2022.
– No subsidies –
But in the end, it was the low-key hedge fund project DeepSeek that accomplished the feat, outstripping domestic juggernauts and triggering a Wall Street rout that wiped over half a trillion dollars off of US chip titan Nvidia’s market capitalisation.
“It is interesting that this breakthrough was achieved not by government-backed research institutes and large (state-owned enterprises), but by a hedge fund with no government subsidies,” noted Zhiwei Zhang, president and chief economist at Pinpoint Asset Management.
Beijing is unlikely to be discouraged, however, with Zhang adding that DeepSeek’s success “will likely motivate the government to further promote technological innovation by the private sector”.
The road ahead for DeepSeek will also feature major challenges overseas, with calls mounting for US authorities to act more urgently to prevent the flow of advanced chips to Chinese firms.
And with President Donald Trump vowing to impose blanket tariffs on China in coming weeks for its alleged role in the US fentanyl crisis as well as “unfair” trade practices, a relaxation of curbs on advanced chip exports appears unlikely.
Beijing’s policy is also increasingly driven by national security concerns — with President Xi Jinping remarking in a speech this week that the country had faced “complex and severe situations” throughout the past year.
Despite growing fears of an intensified trade war, DeepSeek surged to the top of Apple’s App Store download charts this week as curious consumers flocked to test it.
– TikTok fate? –
The firm’s growing user base overseas may lead to fresh challenges stemming from Western governments’ long-standing concerns about the Chinese government’s potential espionage via locally developed apps, as well as heavy state censorship of content deemed by Beijing to be undesirable.
Authorities in the country have in recent years rolled out new regulations for the burgeoning field of generative AI, ensuring that content it produces aligns with Beijing’s official narrative on sensitive issues such as the status of Taiwan or alleged human rights abuses.
In addition to screening out obscenity and encouragement of violence, Chinese chatbots are required to adhere to the government’s “core socialist values” — a decree regulators say is to promote “social stability”.
Another potential pitfall in DeepSeek’s quest to become the global go-to chatbot is how it handles the personal information of its users.
The potential ban of TikTok in the United States is fuelled in large part by concerns that user data stored on servers owned by a China-based company poses a major national security risk.
“DeepSeek’s cost efficiency is praiseworthy, but the privacy implications of its data collection would raise significant concerns,” said Saeed Rehman, senior lecturer in cybersecurity and networking at Flinders University.
“This situation may evoke similar concerns to those raised for TikTok, where data privacy and security have been hotly debated,” he said.
DeepSeek — whose founder Liang Wenfeng once said he became convinced as a student that AI would “change the world” — arrived on the world stage this week with a clamour.
How long it stays on top will depend on how it manages the litany of potential perils that lie in its path.
No comments:
Post a Comment