How U.S. Tech was Caught Unaware by Chinese AI

Jaxon Carey

Staff Writer

The day is January 20, 2025. It was a completely normal morning, until DeepSeek-R1 was published. In one week, the AI world went from calm to a storm of panic. War rooms were drafted, stocks crashed, and tech companies watched $1 billion disappear. The U.S. has been taken by surprise by Chinese technology advancement, and there are dire consequences for this. 

According to Fortune, Meta, the owner of Instagram and a competitor in the AI arms race, is “scrambling multiple ‘war rooms’ of engineers” to figure out how DeepSeek’s AI is beating out every other AI research competitor. These war rooms are reportedly attempting to determine how the Chinese hedge fund High-Flyer Capital managed to release an AI chatbot, named R1, that can perform equally as good as ChatGPT and at a fraction of the cost. Meta and other AI research companies are all asking the same questions. How did High-Flyer reduce the cost of training and running DeepSeek? What data was used to train this model? And finally, how can Meta (and others) restructure their AI models based on DeepSeek?

           To compare some statistics, DeepSeek-R1 took $6 Million to train, was running on old generation hardware, and according to CNN Business, only needs 2000 Nvidia chips. Compare that to ChatGPT’s o1 model, which took 20x the resources to train, and the difference in production is clear. According to Forbes, Blaine Vess, founder of Immeasurable and co-founder of Student Brands, stated that DeepSeek outperforms OpenAI in two key statistics. DeepSeek-R1 has a 97.3% accuracy in high level mathematics, all while it costs only $0.15 per million tokens. OpenAI operates at a cost of $15 per million tokens. Simply put, China’s DeepSeek AI has shaken the AI world and upset ChatGPT, reports AILab. 

This upheaval sent Nvidia stocks into freefall, with $600 billion being wiped from their market worth in one day. The Chinese start-up has left the previously dominant U.S. tech industry reeling according to Reuters. Nearly $1 trillion total has been shed from tech companies across the U.S. and E.U. According to Business Insider, “losses gathered. . . after DeepSeek became the most downloaded app on Apple’s App Store in the US on Monday.”

           This is a broader reflection of the consequences of ignoring China’s rise. Global News reports, “DeepSeek bursting on to the AI scene has upended the industry’s perception that China was years behind. . . US rivals.” It wasn’t just tech investors who were taken by surprise, with Reuters quoting President Donald Trump as saying DeepSeek was “a wake-up call for our industries that we should be laser-focused on competing to win.” The United States has been falling behind in technology research for far too long. Back in March of 2023, TechSpot reports that the Australian Strategic Policy Institute claimed that China holds the lead in 37 crucial and strategic technologies, with the U.S. holding the lead in only seven. China has just overtaken AI. 

           The future of AI is anything but certain. Newly appointed “AI czar” David Sacks has posted on the social media platform X (formerly Twitter) that “The AI race will be very competitive.” This comes as President Donald Trump, according to The Associated Press, is putting $500 billion into Project Stargate, which is focused on spurring more development and research of AI systems in the U.S. The consequences of ignoring Chinese technological development have been disastrous, but with recognition from senior federal officials and entrepreneurs alike, this is one mistake the U.S. is hoping not to make again.

Image courtesy of Getty Images.