DeepSeek and destroy: how a Chinese AI startup shook Silicon Valley

深探与剿灭:一家中国人工智能初创企业如何震撼硅谷

Money Talks from The Economist

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2025-01-31

43 分钟
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Over the past two years, investor enthusiasm for anything AI has sent shares in Nvidia, America's chip champion, skyrocketing. But on Monday, a new AI model from Chinese firm DeepSeek sent shockwaves through the markets. It performs nearly as well as the best-in-class Western models, but requires a fraction of the computing power—and therefore a fraction of the cost. In this episode, we examine whether the DeepSeek drama could overturn the economics of AI, and what it will mean for Nvidia and the AI race. Hosts: Mike Bird and Ethan Wu. Guests: The Economist's Alex Hern and Don Weinland.  Transcripts of our podcasts are available via economist.com/podcasts. Listen to what matters most, from global politics and business to science and technology—subscribe to Economist Podcasts+.
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  • When markets opened on Monday,

  • the US tech industry and its investors were thrown into panic.

  • One company was hit particularly hard.

  • NVIDIA has its worst route

  • In history, in terms of market capitalization, ever on the market,

  • we have never seen almost half a trillion dollars wiped out from one single name.

  • Investors were responding to the release of an impressive new large-language model.

  • But it wasn't one developed in Silicon Valley.

  • It was built in Hangzhou by the Chinese firm DeepSeek.

  • And crucially, unlike the models that OpenAI and Meta have been pouring money into,

  • this one did not rely on Nvidia's extra powerful state-of-the-art chips.

  • A US export ban on those chips means DeepSeek has done what many thought was impossible,

  • to build and train a model which is up there with the best,

  • using comparatively basic chips.

  • Now the most stunning thing here isn't necessarily that China has developed a pretty good AI app,

  • it's how cheap it is.

  • DeepSeek says that their AI model only cost $5.6 million.

  • That's a fraction of what it takes Meta and OpenAI to train up their models,

  • throwing the dominance of Western firms and their chip maker of choice into question.

  • So how could a new generation of cheaper AI models change the world?