Rising Influence of DeepSeek: A Chinese AI Phenomenon

DeepSeek, a burgeoning name in artificial intelligence, has rapidly ascended from a modest ¥1 million startup to a formidable global competitor within the industry. A comprehensive investigation by RFA Cantonese reveals that DeepSeek’s spectacular rise is closely intertwined with the Chinese government, a connection that raises critical questions about its potential impact on global markets.

Tremors in the Global Tech Market

On a Monday that rattled worldwide financial markets, DeepSeek soared past ChatGPT on app charts, catching the attention of investors and knocking a staggering US$1 trillion off tech shares’ values. Notably, Nvidia, a key player in the sector, suffered a significant devaluation, losing nearly US$600 billion in market capitalization.

This upheaval prompted U.S. President Donald Trump to assert that DeepSeek's rise should serve as a critical wake-up call for the American tech industry, emphasizing the necessity for a competitive edge. In response, Trump announced a monumental US$500 billion AI initiative, pooling the resources of OpenAI, Oracle, and Japan’s SoftBank.

Yet, DeepSeek’s journey has not been without its hurdles. The company recently faced a cyberattack that temporarily impeded new user registrations, a situation confirmed by an update on their status page.

Connections to Chinese Political Dominance

DeepSeek's rapid success is notably tied to significant backing from the ruling Chinese Communist Party, which is powerfully invested in the advancement of AI technologies. Following OpenAI's suspension of services to China, Hong Kong, and Macau, DeepSeek seized the opportunity to fill the gap.

A vital factor in DeepSeek’s growth is its inclusion in the prestigious National High-tech Enterprise list of Zhejiang Province, providing it with favorable tax policies and state support to fuel research and development.

Liang Wenfeng, the founder of DeepSeek, has been actively engaged with the Chinese government, underscored by his recent invitation to offer insights to Premier Li Qiang on the government’s work report. Such interactions place DeepSeek at the core of China's strategy for an innovation-led economic revival.

Premier Li's recent symposium with experts across various fields highlighted the nation's focus on technological innovation as a catalyst for economic transformation, further cementing the government's commitment to bolstering companies like DeepSeek.

Navigating U.S.-China Tech Politics

The strategic importance of DeepSeek is further augmented by the ongoing U.S. export restrictions on high-end tech components to China. These restrictions, part of a broader effort to limit China’s access to AI-enabling technologies, put further pressure on Chinese enterprises.

DeepSeek’s Firefly-2 computer utilizes 10,000 A100 GPU chips, paralleling Nvidia’s DGX-A100 performance but at reduced cost and energy consumption. Although facing a chip shortage, Liang has expressed a lack of immediate financial constraints and confirmed no short-term plans for additional funding.

Reports suggest that before the U.S. imposed its export ban, Liang had amassed a substantial stockpile of Nvidia chips, with estimates ranging from 10,000 to 50,000. This proactive measure underscores the intricate interplay between technological advancement and geopolitical strategy in both the company’s and the country's ambitions.