US vs China: AI War

This is my favorite line from the movie “Ironman”. A very simple line but it manages to show us how special Tony Stark is.

When I read about DeepSeek and how it is shaking up the entire AI industry (and the US stock market), this scene immediately occupied my mind.

A group of Chinese engineers created an AI model named ‘DeepSeek’. It took merely 2 months and a budget of $6 million, as opposed to the billions spent by the US’s tech titans.

Surprisingly, DeepSeek has proved that its performance is at the same bar as the US’s leading AI models including ChatGPT – even surpassing them in some critical benchmarks.

How did they do it? There are several innovations that contributed to its success – but in short, they challenged the traditional approach based on the belief that the future of AI is all about scaling up.

Unlike other AI models, DeepSeek activates only the necessary parameters for the given mission. They also made it open source so more organizations will integrate it into their operations.

This new Chinese AI is casting doubt on whether the US could maintain its leadership in AI. Investors are now worried if the US’s tech companies can make profits that can offset the billions of dollars they are investing in the chips and data centers.

So, it’s official now. The US and China are in an AI arms race competing who will shape the future innovation landscape. We also know now that the US’s regulation on chip export was not effective enough to stop China’s progress.

Note: I am not saying DeepSeek is perfectly flawless. It seems to be biased when it is asked politically sensitive issues. Due to geopolitical tensions, it would be difficult to build trust in the West and probably encounter various challenges in data privacy issues. The US blocked TikTok, so I won’t be surprised if DeepSeek gets banned in the US – and across the Western world.

Also, DeepSeek succeeded in attracting worldwide attention thanks to its low prices – but it would be difficult to maintain such low prices in the long run unless they find new revenue streams. On the other hand, its US rivals are established tech giants with diverse business models.

However, it is clear that DeepSeek has heated up the global AI competition and raised some serious questions about the US’s approach to AI.