Tuesday, February 04, 2025

Europe's tech sector sees silver lining in DeepSeek's AI shake up

China’s DeepSeek AI chatbot may have rattled US tech giants, but in Europe some industry players see a potential advantage.



Issued on: 01/02/2025 - RFI

DeepSeek claims to have developed its AI model with just €6.23 million, far below its Western competitors. AP - Andy Wong

By:Jan van der Made

As US-based company Nvidia – the world’s leading manufacturer of AI chips – reels from a record-breaking stock drop, European semiconductor firms and AI developers are weighing what the disruption could mean for them.

Philippe Notton, CEO of SiPearl, a European company developing processors for supercomputers, told RFI that DeepSeek’s ability to develop AI with fewer resources could be a turning point.

"That's bad news for Nvidia in terms of future sales, because if you can develop some competitive solution with fewer Graphics Processing Units (GPUs), it means that Nvidia will sell fewer chips," he said.

"All the forecasts predict that the hype on GPUs and Nvidia is collapsing."

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Unexpected crash


DeepSeek’s launch last week sent tech stocks plummeting.

On 27 January, Nvidia, called the "posterchild of America's AI frenzy" by Bloomberg, lost $589 billion in market value – the biggest market-cap loss for a single stock ever.

The Nasdaq 100 fell 3 percent, and the S&P 500 dropped 1.5 percent.

DeepSeek claims to have developed its model with just €6.23 million, far below its Western competitors.

For comparison, Stephen Walker, an AI developer and founder of Klu.ai, estimates that training OpenAI's ChatGPT requires about 25,000 Nvidia H100 chips costing between €23,900 and €29,700 each – bringing total development costs to nearly €920 million.

"If what DeepSeek said is true, they can develop such a model for only €5.75 million with some 2,000 to 4,000 GPUs, which is very, very low compared to what the others are using," Notton said.

"It's good news for the planet because it's going to use much less energy to build this. It's good news for Europe because they could do it for a limited budget."

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Plagiarism concerns

As the dust settled, accusations surfaced that DeepSeek may have built its model using data from US companies. OpenAI and Microsoft are investigating whether DeepSeek trained its chatbot using their proprietary data.

Daniel Castro, vice-president of the Washington-based Information Technology and Innovation Foundation (ITIF), compared the situation to past innovations.

"Apple didn't invent the smartphone," he said. "They just invented the best one, and that's why they were so successful with the iPhone.

"When something like this comes out, all the other companies are asking themselves: what are we doing to make sure to lower the costs. Ultimately that competition will be very good for the AI industry."

Visitors look at artist Refik Anadol's "Unsupervised" exhibit at the Museum of Modern Art, Wednesday, Jan. 11, 2023, in New York. The new AI-generated installation is meant to be a thought-provoking interpretation of the New York City museum's prestigious collection. AP - John Minchillo

French industry

Meanwhile, European tech firms scrutinise the DeepSeek phenomenon with interest.

According to Semiconductor Review, the industry generates €25 billion in yearly revenue and employs more than 50,000 people, constituting over 10 percent of the country's total exports.

However, Acsiel, which monitors trends in the French electronics sector, reports the market fell 19 percent in the third quarter of 2024, to €486 million.

A massive reduction of research and developing costs in the increasingly competitive AI market may prove very welcome.

The French AI start-up Mistral on Thursday hailed the latest DeepSeek model as "great," and announced another new release of its own.

"R1 is a great and complementary piece of open-source technology," Mistral said in a statement, while announcing its own new release "Mistral Small 3", which it claims is competitive with larger models including Meta's Llama and Alibaba's Qwen.

This picture taken on March 25, 2024, shows the Mistral Ai logo on a smartphone in Mulhouse, eastern France. 
AFP - SEBASTIEN BOZON


Over-regulation?

However, US analysts argue that European AI regulations could hinder innovation.

Stephen Ezell, vice-president at ITIF, said the EU's AI Act, introduced in July 2024, was one of the most restrictive regulatory regimes we've seen for AI globally.

"If I was a European policymaker looking at how a company like DeepSeek is challenging probably the top European AI company, Mistral ... I would be very concerned about the approach of now putting them at a further disadvantage through this regulatory regime that really restricts access," Ezell said.

The developments gain added significance following US President Donald Trump's announcement of the €500 billion Stargate project, a joint venture between OpenAI, Oracle and SoftBank that he called "the largest AI infrastructure project in US history".

This is something that Europe cannot compete with, Notton said.

"But if finally, we can do it for let's say 100 times cheaper, it becomes much more reasonable," which makes the DeepSeek phenomenon "a kind of revolution because if it can be produced for a lower price, much more countries will be able to do it."

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Fears for free speech

Advocates of free speech and data protection advocates are worried.

If users ask DeepSeek questions that are sensitive to China's Communist Party, it suddenly stops functioning properly.

Probes about the June 4, 1989 Tiananmen Square massacre, independence for Tibet or Taiwan, or about deposed politicians or Chinese dissidents are flatly answered with "sorry, that's beyond my current scope. Let’s talk about something else", or "I am sorry, I cannot answer that question. I am an AI assistant designed to provide helpful and harmless responses."

But Castro is not worried. "American and European researchers are not going to use this AI chatpod to research Chinese history or politics," he told RFI. "If that was the primary use, that would be of concern."
Screenshot of DeepSeek giving evasive answers on questions that may be politically sensitive in China © Screenshot DeepSeek

Yet other worries remain.

Dieter Kugelmann, president of Germany's Authority for Data Protection and Freedom of Information, warned that DeepSeek "seems to be lacking in pretty much everything in terms of data protection law".

The app collects extensive user data – including IP addresses, chat histories and keystroke patterns – which could be stored on servers in Hangzhou, thus potentially accessible to China's Ministry of State Security.

If these concerns prove valid, the EU may need to act. The European General Data Protection Regulation only allows data transfers with countries offering comparable protections to the EU.

No such agreement exists between China and the EU.



France pitches AI summit as ‘wake-up call’ for Europe

By AFP
February 3, 2025


OpenAI boss Sam Altman will attend the Paris summit and an appearance by DeepSeek's Liang Wenfeng is under discussion - Copyright AFP Lionel BONAVENTURE

Daxia ROJAS

France hosts top tech players next week at an artificial intelligence summit meant as a “wake-up call” for Europe as it struggles with AI challenges from the United States and China.

Players from across the sector and representatives from 80 nations will gather in the French capital on February 10 and 11 in the sumptuous Grand Palais, built for the 1900 Universal Exhibition.

In the run-up, President Emmanuel Macron will on February 4 visit research centres applying AI to science and health, before hosting scientists and Nobel Prize winners at his Elysee Palace residence on Wednesday.

A wider science conference will be held at the Polytechnique engineering school on Thursday and Friday.

“The summit comes at exactly the right time for this wake-up call for France and Europe, and to show we are in position” to take advantage of the technology, an official in Macron’s office told reporters.

In recent weeks, Washington’s announcement of $500 billion in investment to build up AI infrastructure and the release of a frugal but powerful generative AI model by Chinese firm DeepSeek have focussed minds in Europe.

France must “not let this revolution pass it by”, Macron’s office said.

Attendees at the summit will include Sam Altman, head of OpenAI — the firm that brought generative models to public consciousness in 2022 with the launch of ChatGPT.

Google boss Sundar Pichai and Nobel Prize winner Demis Hassabis, who leads the company’s DeepMind AI research unit, will also come, alongside Arthur Mensch, founder of French AI developer Mistral.

The Elysee has said there are “talks” on hosting DeepSeek founder Liang Wenfeng, and has yet to clarify whether X owner Elon Musk — who has his own generative initiative, xAI — has accepted an invitation.

Nor is it clear who will attend from the United States and China, with the French presidency saying only “very high level” representatives will come.

Confirmed guests from Europe include European Commission chief Ursula von der Leyen and German Chancellor Olaf Scholz.

– ‘Stoke confidence’ –

The tone of the AI summit will be “neither catastrophizing, nor naive,” Macron’s AI envoy Anne Bouverot told AFP.

Hosting the conference is also an opportunity for Paris to show off its own AI ecosystem, which numbers around 750 companies.

Macron’s office has said the summit would see the announcement of “massive” investments along the lines of his annual “Choose France” business conference, at which 15 billion euros ($15.4 billion) of inward investment were pledged in 2024.

Beyond the economic opportunities, AI’s impact on culture including artistic creativity and news production will be discussed in a side-event over the weekend.

Debates open to the public, such as that one, are aimed at showing off “positive use cases for AI” to “stoke confidence and speed up adoption” of the technology, said France’s digital minister Clara Chappaz.

For now the French public is sceptical of AI, with 79 percent of respondents telling pollsters Ifop they were “concerned” about the technology in a recent survey.

– More ‘inclusive’ AI? –

Paris says it also hopes the summit can help kick off its vision of a more ethical and accessible and less resource-intensive AI.

At present, “the AI under development is pushed by a few large players from a few countries”, Bouverot said, whereas France wants “to promote more inclusive development”.

Indian Prime Minister Narendra Modi has been invited to co-host the Paris summit, in a push to bring governments on board.

One of the summit’s aims is the establishment of a public-interest foundation for which Paris aims to raise 2.5 billion euros over five years.

The effort would be “a public-private partnership between various governments, businesses and philanthropic foundations from different countries”, Macron’s office said.

Paris hopes at the summit to chart different efforts at AI governance around the world and gather commitments for environmentally sustainable AI — although no binding mechanism is planned for now.

“There are lots of big principles emerging around responsible, trustworthy AI, but it’s not clear or easy to implement for the engineers in technical terms,” said Laure de Roucy-Rochegonde, director of the geopolitical technology centre at the French Institute for International Relations (IFRI).


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