DeepSeek Is America's Wake-Up Call - The American Conservative
And Trump’s reaction to DeepSeek R1’s release was informed and multifaceted. NVIDIA was blood red. President Trump warned it was a “wake up call.” More than $1 trillion had been wiped from Wall Street overnight. The AI arms race was finally front and center.
Surprise for the West
On the eve of Lunar New Year, Chinese hedge fund billionaire Liang Wenfeng had a surprise for the West that no one saw coming. Liang’s Hangzhou-based DeepSeek AI lab had bested America's finest in front of the whole world, and they'd done it on a bootstrap budget. Perplexity CEO Aravind Srinivas called it “DOGE for AI.”
“What took Google and Open AI years and hundreds of millions of dollars to build, DeepSeek says took it just two months and less than 6 million dollars,” CNBC reported after DeepSeek’s release of its free Large-Language Model, R1, sent the stock price of major tech giants spiraling in the early week of trading.
The Rise of Large-Language Models
Large-Language Models (LLMs) are the engines that power chatbots and other A.I. applications. Their abilities in mathematics, language reasoning, and coding promise a new world of extreme efficiency and cost-saving for corporations and individual citizens alike. America and its big-money tech teams had used cash advantages to outpace and corner the market. Until this week.
DeepSeek's free, open-source model is reportedly sharper at reasoning than the pay-to-play offerings from OpenAI and Google. Developers eager to work with the new platform downloaded DeepSeek R1 en masse. By Tuesday, the Chinese-based A.I. product sat atop Apple's App Store.
The Maverick Behind DeepSeek
As Silicon Valley’s best and brightest piled enormous sums of money into proprietary LLMs over the last half decade, Liang and his team were busy creating a leaner, more cost-efficient model for a fraction of the cost on the other side of the ocean–or so they said.
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Liang, a maverick businessman who made billions in the early 2020s off his quant trading hedge fund High-Flyer, spent years purchasing a war chest of dated Nvidia chips. News outlets labeled the move “eccentric,” but Liang could see the computer code on the whiteboard. He hired the smartest students China had to offer and quietly got to work.
Market Disruption
The chaos that has unfolded, in the markets and in the intellectual town square, over the last few days is mind-numbing. Nvidia sank 17 percent on Monday, then it rallied on Tuesday, and then sank again on Wednesday. By mid-week Microsoft was accusing DeepSeek of illegally stealing OpenAI’s intellectual property to create R1–and then later that day announced that the model was available on its AI platforms.
The Debate and Reactions
Much of the shock was due to the $5.5 million investment number. If a group of rag-tag Chinese computer scientists and their eccentric billionaire owner could outperform American giants, a deep rethink of the space might be needed. But not everyone was buying it.
President Trump's reaction was swift and detailed, questioning the implications for American tech companies and workers. He expressed the need for the U.S. to compete and win in the AI arms race.
Looking Ahead
As the technology and markets continue to evolve rapidly, it is clear that AI is reshaping industries and challenging traditional norms. It is crucial for America to adapt and innovate in order to stay competitive in the global landscape.
