Posted originally on Jan 29, 2025 by Martin Armstrong 

It was only a matter of time before an innovative mind created the next mainstream AI tool to compete with ChatGPT. In a massive step toward AI advancement, Liang Wenfeng of China launched DeepSeek, an open-source large language models (LLM) intended to compete if not one day overshadow ChatGPT. The launch immediately wiped $1 trillion off the US stock exchange and the tech competition between China and the US is coming to a head.

ChatGPT is run by OpenAI. Its creation marked the dawn of a new way of interacting with the internet and accessing information. Users can ask AI to instantaneously perform actions and it is reshaping the way the world operated. People have created businesses based on ChatGPT. There have been countless warnings of AI replacing human jobs. Governments are still uncertain how to regulate these services and the data they pull from users. Of course, countless services like ChatGPT have launched in recent years, but DeepSeek may be the next best alternative.

Wenfeng hired all the top minds graduating from Chinese universities and paid them top dollar to create DeepSeek for a fraction of what it took to create ChatGPT. OpenAI’s GPT-4, launched in 2023, cost $100 million to develop; DeepSeek-R1 began with a $6 million investment.

Semiconductor chips are shaping the tech race. It takes semiconductor chips to operate these AI programs and that has been an ongoing problem for American companies. Chinese companies do not have such problems. There is much speculation that ChatGPT did not require the estimated 10,000 GPUs and 3,500 NVIDIA servers. Nonetheless, DeepSeek is operating on less. Now, DeepSeek has around 50,000 NVIDIA H100 chips but they cannot speak about the matter due to US export controls.

President Trump stated that DeepSeek is a reminder that American companies need to be “laser focused” on competing with China. Everyone is impressed at the low operating costs. “Instead of spending billions and billions, you’ll spend less, and you’ll come up with, hopefully, the same solution,” Trump noted. Some US politicians are already calling for a ban. “The U.S. cannot allow CCP models such as DeepSeek to risk our national security and leverage our technology to advance their AI ambitions. We must work to swiftly place stronger export controls on technologies critical to DeepSeek’s AI infrastructure,” Rep. John Moolenaar, R-Mich., the chair of the House Select Committee on China, said Monday.

Hangzhou DeepSeek Artificial Intelligence Co., Ltd, owned and funded by hedge fund High-Flyer has inserted $2 trillion into the US markets at the time of this writing. Critics claim that DeepSeek censors available information based on what the CCP will and will not permit. Still, investors seem extremely bullish on DeepSeek, which has already surpassed ChatGPT as the most downloaded AI app on the Apple app store.