
It shocked the US market but has China's DeepSeek changed AI?
Still relevant
It has now been six months since DeepSeek stunned the world.Today, China's breakthrough app has largely dropped out of the headlines. It's no longer the hot topic at happy hour here in San Francisco. But DeepSeek hasn't disappeared.DeepSeek challenged certain key assumptions about AI that had been championed by American executives like Sam Altman, CEO of ChatGPT-maker OpenAI."We were on a path where bigger was considered better," according to Sid Sheth, CEO of AI chip startup d-Matrix.Perhaps maxing out on data centres, servers, chips, and the electricity to run it all wasn't the way forward after all.Despite DeepSeek ostensibly not having access to the most powerful tech available at the time, Sheth told the BBC that it showed that "with smarter engineering, you actually can build a capable model".The surge of interest in DeepSeek took hold over a weekend in late January, before corporate IT personnel could move to stop employees from flocking to it.When organisations caught on the following Monday, many scrambled to ban workers from using the app as worries set in about whether user data was potentially being shared with the People's Republic of China, where DeepSeek is based.But while exact numbers aren't available, plenty of Americans still use DeepSeek today.Certain Silicon Valley start-ups have opted to stick with DeepSeek in lieu of more expensive AI models from US firms in a bid to cut down on costs.One investor told me for cash-strapped firms, funds saved by continuing to use DeepSeek are helping to pay for critical needs such as additional headcount. They are, however, being careful. In online forums, users explain how to run DeepSeek-R1 on their own devices rather than online using DeepSeek's servers in China - a workaround they believe can protect their data from being shared surreptitiously."It's a good way to use the model without being concerned about what it's exfiltrating" to China, said Christopher Caen, CEO of Mill Pond Research.
US-China rivalry
DeepSeek's arrival also marked a turning point in the US-China AI rivalry, some experts say. "China was seen as playing catch-up in large language models until this point, with competitive models but always trailing the best western ones," policy analyst Wendy Chang of the Mercator Institute for China Studies told the BBC.A large language model (LLM) is a reasoning system trained to predict the next word in a given sentence or phrase. DeepSeek changed perceptions when it claimed to have achieved a leading model for a fraction of the computational resources and costs common among its American counterparts.OpenAI had spent $5bn (£3.7bn) in 2024 alone. By contrast, DeepSeek researchers said they had developed DeepSeek-R1 – which came out on top of OpenAI's o1 model across multiple benchmarks – for just $5.6m (£4.2m). "DeepSeek revealed the competitiveness of China's AI landscape to the world," Chang said.American AI developers have managed to capitalize on this shift. AI-related deals and other announcements trumpeted by the Trump administration and major American tech companies are often framed as critical to staying ahead of China.Trump's AI czar David Sacks noted the technology would have "profound ramifications for both the economy and national security" when the administration unveiled its AI Action Plan last month."It's just very important that America continues to be the dominant power in AI," Sacks said.DeepSeek has never managed to quell concerns over the security implications of its Chinese origins.The US government has been assessing the company's links to Beijing, as first reported by Reuters in June.A senior US State Department official told the BBC they understood "DeepSeek has willingly provided, and will likely continue to provide, support to China's military and intelligence operations".DeepSeek did not respond to the BBC's request for comment but the company's privacy policy states that its servers are located in the People's Republic of China."When you access our services, your Personal Data may be processed and stored in our servers in the People's Republic of China," the policy says. "This may be a direct provision of your Personal Data to us or a transfer that we or a third-party make."
A new approach?
Earlier this week, OpenAI reignited talk about DeepSeek after releasing a pair of AI models.These were the first free and open versions – meaning they can be downloaded and modified - released by the American AI giant in five years, well before ChatGPT ushered in the consumer AI era."You can draw a straight line from DeepSeek to what OpenAI announced this week," said d-Matrix's Sheth. "DeepSeek proved that smaller, more efficient models could still deliver impressive performance—and that changed the industry's mindset," Sheth told the BBC. "What we're seeing now is the next wave of that thinking: a shift toward right-sized models that are faster, cheaper, and ready to deploy at scale."But to others, for the major American players in AI, the old approach appears to be alive and well.Just days after releasing the free models, OpenAI unveiled GPT-5. In the run-up, the company said it significantly ramped up its computing capacity and AI infrastructure.A slew of announcements about new data centre clusters needed for AI has come as American tech companies have been competing for top-tier AI talent.Meta CEO Mark Zuckerberg has ploughed billions of dollars to fulfil his AI ambitions, and tried to lure staff from rivals with $100m pay packages.The fortunes of the tech giants seemed more tethered than ever to their commitment to AI spending, as evidenced by the series of blowout results revealed this past tech earnings season.Meanwhile, shares of Nvidia, which plunged just after DeepSeek's arrival, have rebounded – touching new highs that have made it the world's most valuable company in history."The initial narrative has proven a bit of a red herring," said Mill Pond Research's Caen.We are back to a future in which AI will ostensibly depend on more data centres, more chips, and more power. In other words, DeepSeek's shake-up of the status quo hasn't lasted.And what about DeepSeek itself?"DeepSeek now faces challenges sustaining its momentum," said Marina Zhang, an associate professor at the University of Technology Sydney.That's due in part to operational setbacks but also to intense competition from companies in the US and China, she said.Zhang notes that the company's next product, DeepSeek-R2, has reportedly been delayed. One reason? A shortage of high-end chips.
Sign up for our Tech Decoded newsletter to follow the world's top tech stories and trends. Outside the UK? Sign up here.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


The Independent
a few seconds ago
- The Independent
Israel is in talks to possibly resettle Palestinians from Gaza in South Sudan
Israel is in discussions with South Sudan about the possibility of resettling Palestinians from the Gaza Strip to the war-torn East African country, part of a wider effort by Israel to facilitate mass emigration from the territory left in ruins by its 22-month offensive against Hamas. Six people familiar with the matter confirmed the talks to The Associated Press. It's unclear how far the talks have advanced, but if implemented, the plans would amount to transferring people from one war-ravaged land at risk of famine to another, and raise human rights concerns. Israeli Prime Minister Benjamin Netanyahu says he wants to realize U.S. President Donald Trump 's vision of relocating much of Gaza's population through what Netanyahu refers to as 'voluntary migration.' Israel has floated similar resettlement proposals with other African nations. Palestinians, rights groups, and much of the international community have rejected the proposals as a blueprint for forcible expulsion in violation of international law. For South Sudan, such a deal could help it build closer ties to Israel, now the almost unchallenged military power in the Middle East. It is also a potential inroad to Trump, who broached the idea of resettling Gaza's population in February but appears to have backed away in recent months. Israel's Foreign Ministry declined to comment and South Sudan's foreign minister did not respond to questions about the talks. A U.S. State Department spokesperson said it doesn't comment on private diplomatic conversations. Egypt opposes proposals to resettle Palestinians out of Gaza Joe Szlavik, the founder of a U.S. lobbying firm working with South Sudan, said he was briefed by South Sudanese officials on the talks. He said an Israeli delegation plans to visit the country to look into the possibility of setting up camps for Palestinians there. No known date has been set for the visit. Israel did not immediately respond to a request for confirmation of the visit. Szlavik said Israel would likely pay for makeshift camps. Edmund Yakani, who heads a South Sudanese civil society group, said he had also spoken to South Sudanese officials about the talks. Four additional officials with knowledge of the discussions confirmed talks were taking place on condition of anonymity because they were not authorized to discuss them publicly. Two of the officials, both from Egypt, told AP they've known for months about Israel's efforts to find a country to accept Palestinians, including its contact with South Sudan. They said they've been lobbying South Sudan against taking the Palestinians. Egypt is deeply opposed to plans to transfer Palestinians out of Gaza, with which it shares a border, fearing an influx of refugees into its own territory. The AP previously reported on similar talks initiated by Israel and the U.S. with Sudan and Somalia, countries that are also grappling with war and hunger, and the breakaway region of Somalia known as Somaliland. The status of those discussions is not known. 'Cash-strapped South Sudan needs any ally' Szlavik, who's been hired by South Sudan to improve its relations with the United States, said the U.S. is aware of the discussions with Israel but is not directly involved. South Sudan wants the Trump administration to lift a travel ban on the country and remove sanctions from some South Sudanese elites, said Szlavik. It has already accepted eight individuals swept up in the administration's mass deportations, in what may have been an effort to curry favor. The Trump administration has pressured a number of countries to help facilitate deportations. 'Cash-strapped South Sudan needs any ally, financial gain and diplomatic security it can get,' said Peter Martell, a journalist and author of a book about the country, 'First Raise a Flag.' Israel's Mossad spy agency provided aid to the South Sudanese during their decades-long civil war against the Arab-dominated government in Khartoum ahead of independence in 2011, according to the book. The State Department, asked if there was any quid pro quo with South Sudan, said decisions on the issuing of visas are made 'in a way that prioritizes upholding the highest standards for U.S. national security, public safety, and the enforcement of our immigration laws.' From one hunger-stricken conflict zone to another Many Palestinians might want to leave Gaza, at least temporarily, to escape the war and a hunger crisis bordering on famine. But they have roundly rejected any permanent resettlement from what they see as an integral part of their national homeland. They fear that Israel will never allow them to return, and that a mass departure would allow it to annex Gaza and reestablish Jewish settlements there, as called for by far-right ministers in the Israeli government. Still, even those Palestinians who want to leave are unlikely to take their chances in South Sudan, among the world's most unstable and conflict-ridden countries. South Sudan has struggled to recover from a civil war that broke out after independence, and which killed nearly 400,000 people and plunged pockets of the country into famine. The oil-rich country is plagued by corruption and relies on international aid to help feed its 11 million people – a challenge that has only grown since the Trump administration made sweeping cuts to foreign assistance. A peace deal reached seven years ago has been fragile and incomplete, and the threat of war returned when the main opposition leader was placed under house arrest this year. Palestinians in particular could find themselves unwelcome. The long war for independence from Sudan pitted the mostly Christian and animist south against the predominantly Arab and Muslim north. Yakani, of the civil society group, said South Sudanese would need to know who is coming and how long they plan to stay, or there could be hostilities due to the 'historical issues with Muslims and Arabs.' 'South Sudan should not become a dumping ground for people,' he said. 'And it should not accept to take people as negotiating chips to improve relations.' ___ ___


The Independent
a few seconds ago
- The Independent
How restaurants are trying to get Gen Z through their doors
Recent research indicates that Gen Z and Gen Alpha consumers are increasingly favoring spicy foods. Restaurants are introducing more spicy menu items as a cost-effective strategy to attract younger diners and counteract a slowdown in consumer spending. US restaurant chains collectively launched 76 new spicy dishes between March and June, representing about 5 per cent of all new offerings. Approximately 95 per cent of restaurants now serve at least one spicy dish, with the trend particularly strong among the under-30 age group. Major brands such as Chipotle, Wendy's, Taco Bell, and Sprite are capitalizing on this trend by releasing new spicy products or marketing campaigns, often amplified by social media.


Reuters
a minute ago
- Reuters
Congo army and rebels trade blame over clashes, troop buildup
KINSHASA, Aug 12 (Reuters) - Congo's army on Tuesday accused Rwanda-backed rebels of carrying out multiple attacks in eastern Congo which it said violated agreements signed in Washington and Doha, and warned it reserved the right to respond to provocations. The army statement came a day after the rebel group, known as M23, accused Congolese forces of mobilising more troops and violating the terms of a declaration of principles signed on July 19 in Doha voicing support for a permanent ceasefire. The conflicting statements came as peace talks scheduled to resume in Doha last week have been delayed. In the declaration of principles, Congo and M23 pledged to begin talks by August 8 and aim for a final deal by August 18. Neither side currently has delegations in Doha. M23 leader Bertrand Bisimwa said last week that the rebels had not received an invitation to the talks. Another rebel leader, speaking on condition of anonymity, told Reuters the group would not go to Doha "until Kinshasa begins to respect the declaration of principles, which provides for the release of our detained members". The statement on Tuesday from Congo's army said M23 was perpetrating almost daily attacks on its positions. The earlier M23 statement said Congo's army had carried out significant troop movements and military equipment deployments in six different locations. The Qatar-hosted talks were intended to run parallel to a mediation effort by U.S. President Donald Trump's administration involving Congo and Rwanda. Washington hopes the diplomatic push will produce a sustainable peace and attract billions of dollars of Western investment to a region rich in tantalum, gold, cobalt, copper and lithium. M23 rebels seized eastern Congo's largest city Goma in January as part of a rapid advance that has given them control of more territory than ever before. Rwanda, which has long denied helping M23, says its forces act in self-defence against Congo's army and ethnic Hutu militiamen linked to the 1994 Rwandan genocide.