This article is from the source 'bbc' and was first published or seen on . The next check for changes will be

You can find the current article at its original source at https://www.bbc.com/news/articles/c4gpq01rvd4o

The article has changed 12 times. There is an RSS feed of changes available.

Version 7 Version 8
DeepSeek a 'wake-up call' for US tech firms, Trump says US tech stocks steady after DeepSeek AI app shock
(about 2 hours later)
Trump: DeepSeek AI release should be 'wake-up call' for US US tech stocks were steady on Tuesday after they slumped on Monday following the sudden rise of Chinese-made artificial intelligence (AI) app DeepSeek.
US President Donald Trump has called the rise of Chinese company DeepSeek "a wake-up call" for the US tech industry, after the emergence of its artificial intelligence (AI) model triggered shockwaves on Wall Street. Shares in chip giant Nvidia were up over 6% by mid-day trade having sank on Monday, as experts said the US AI sell-off may have been an over-reaction.
Shares in major tech firms such as Nvidia fell sharply, with the chip giant losing almost $600bn (£482bn) in market value. The market hit came as investors rapidly adjusted bets on AI, after DeepSeek's claim that its model was made at a fraction of the cost of those of its rivals.
What has shaken the industry is DeepSeek's claim that its R1 model was made at a fraction of the cost of its rivals - raising questions about the future of America's AI dominance and the scale of investments US firms are planning. Analysts said the development raised questions about the future of America's AI dominance and the scale of investments US firms are planning.
DeepSeek has become the most downloaded free app in the US just a week after it was launched. US President Donald Trump described the moment as "a wake-up call" for the US tech industry, while also suggesting that it could ultimately prove " a positive" for the US.
Responding to the news, Trump said the latest developments in China's AI industry may be "a positive" for the US.
"If you could do it cheaper, if you could do it [for] less [and] get to the same end result. I think that's a good thing for us," he told reporters on board Air Force One."If you could do it cheaper, if you could do it [for] less [and] get to the same end result. I think that's a good thing for us," he told reporters on board Air Force One.
He also said he was not concerned about the breakthrough, adding the US will remain a dominant player in the field.He also said he was not concerned about the breakthrough, adding the US will remain a dominant player in the field.
However, DeepSeek has raised cyber security concerns in some countries with Australian science minister Ed Husic urging caution. Optimism about AI investments has powered much of the boom in US stock markets over the last two years, raising fears of a possible bubble.
He told Australia's national broadcaster ABC: "There are a lot of questions that will need to be answered in time on quality, consumer preferences, data and privacy management." DeepSeek has become the most downloaded free app in the US just a week after it was launched.
DeepSeek is powered by the open source DeepSeek-V3 model, which its researchers claim was trained for around $6m (£4.2m) - significantly less than the billions spent by rivals. But this claim has been disputed by others in AI. Its emergence comes as the US has been warning of a tech race with China, and taking steps to restrict the sale of the advanced chip technology that powers AI to China.
Its emergence comes as the US is restricting the sale of the advanced chip technology that powers AI to China.
To continue their work without steady supplies of imported advanced chips, Chinese AI developers have shared their work with each other and experimented with new approaches to the technology.To continue their work without steady supplies of imported advanced chips, Chinese AI developers have shared their work with each other and experimented with new approaches to the technology.
This has resulted in AI models that require far less computing power than before.This has resulted in AI models that require far less computing power than before.
It also means that they cost a lot less than previously thought possible, which has the potential to upend the industry.It also means that they cost a lot less than previously thought possible, which has the potential to upend the industry.
Following the shock to markets in the US on Monday, the FTSE 100 stock index of the UK's biggest publicly-listed companies appeared resilient in early trading on Tuesday, rising to 0.59% by mid-afternoon. Nvidia, which makes high-tech chips that dominate many AI investments and has seen its share price surge because of expected demand, was among the hardest hit on Monday.
But shares in Japanese AI-related firms including Advantest, Softbank and Tokyo Electron fell sharply, helping to push the benchmark Nikkei 225 down by 1.4%. Its share price dropped by roughly 17% on Monday, wiping roughly $600bn off its market value.
Janet Mui, head of market analysis at RBC Brewin Dolphin, said investors' first response to something that appears groundbreaking is to sell because of the uncertainty.
But she said she expected many companies, like Apple, to benefit if the cost of AI models becomes becomes cheaper.
It could also be a boon for other tech giants, which have faced scrutiny for their high spending on AI so far.
Trump: DeepSeek AI release should be 'wake-up call' for US
Following the shock to markets in the US on Monday, the main indexes were steady.
As of mid-day trading in New York, the Dow Jones was roughly flat, the S&P was up about 0.8% and the tech-heavy Nasdaq had risen 1.7%.
The FTSE 100 stock index of the UK's biggest publicly-listed companies appeared was also resilient in early trading on Tuesday, rising to 0.59% by mid-afternoon.
Earlier shares in Japanese AI-related firms including Advantest, Softbank and Tokyo Electron fell sharply, helping to push the benchmark Nikkei 225 down by 1.4%.
Several other markets in Asia are closed for the Lunar New Year holiday. Mainland China's financial markets will be shut from Tuesday and will reopen on 5 February.Several other markets in Asia are closed for the Lunar New Year holiday. Mainland China's financial markets will be shut from Tuesday and will reopen on 5 February.
Nvidia saw a small rebound when US trading restarted on Tuesday with its shares rising 1.5%. The tech-heavy Nasdaq stock index was up 0.2%.
Despite heavy losses, investors who bought Nvidia shares a year ago are still sitting on a decent profit, with shares back to where they had been last October.
Who founded DeepSeek?Who founded DeepSeek?
The company was founded in 2023 by Liang Wenfeng in Hangzhou, a city in southeastern China.The company was founded in 2023 by Liang Wenfeng in Hangzhou, a city in southeastern China.
The 40-year-old, an information and electronic engineering graduate, also founded the hedge fund that backed DeepSeek.The 40-year-old, an information and electronic engineering graduate, also founded the hedge fund that backed DeepSeek.
He was recently seen at a meeting between industry experts and the Chinese premier Li Qiang.He was recently seen at a meeting between industry experts and the Chinese premier Li Qiang.
In a July 2024 interview with The China Academy, external, Mr Liang said he was surprised by the reaction to the previous version of his AI model.In a July 2024 interview with The China Academy, external, Mr Liang said he was surprised by the reaction to the previous version of his AI model.
"We didn't expect pricing to be such a sensitive issue," he said."We didn't expect pricing to be such a sensitive issue," he said.
"We were simply following our own pace, calculating costs, and setting prices accordingly.""We were simply following our own pace, calculating costs, and setting prices accordingly."
After DeepSeek-R1 was launched earlier this month, the company boasted of "performance on par with" one of OpenAI's latest models when used for tasks such as maths, coding and natural language reasoning.After DeepSeek-R1 was launched earlier this month, the company boasted of "performance on par with" one of OpenAI's latest models when used for tasks such as maths, coding and natural language reasoning.
DeepSeek's technology has been praised by high profile figures including OpenAI chief Sam Altman who called it "an impressive model, particularly around what they're able to deliver for the price", though he added that OpenAI would "obviously deliver much better models" moving forward.DeepSeek's technology has been praised by high profile figures including OpenAI chief Sam Altman who called it "an impressive model, particularly around what they're able to deliver for the price", though he added that OpenAI would "obviously deliver much better models" moving forward.
"DeepSeek's ability to rival US models despite limited access to advanced hardware demonstrates that software ingenuity and data efficiency can compensate for hardware constraints," said Marina Zhang, an associate professor at the University of Technology Sydney, who focuses on China's high-tech industries."DeepSeek's ability to rival US models despite limited access to advanced hardware demonstrates that software ingenuity and data efficiency can compensate for hardware constraints," said Marina Zhang, an associate professor at the University of Technology Sydney, who focuses on China's high-tech industries.
Ion Stoica, co-founder and executive chair of AI software company Databricks, told the BBC the lower cost of DeepSeek could spur more companies to adopt AI in their business.Ion Stoica, co-founder and executive chair of AI software company Databricks, told the BBC the lower cost of DeepSeek could spur more companies to adopt AI in their business.
"If that happens, this reduction in cost can accelerate the progress of AI," he said. "So overall, the market will expand faster, and the value of the market will grow faster.""If that happens, this reduction in cost can accelerate the progress of AI," he said. "So overall, the market will expand faster, and the value of the market will grow faster."
The Chinese company claims its model can be trained on 2,000 specialised chips compared to an estimated 16,000 for leading models.The Chinese company claims its model can be trained on 2,000 specialised chips compared to an estimated 16,000 for leading models.
But not everyone is convinced. Some have cast doubt on some of DeepSeek's claims, including tech mogul Elon Musk.But not everyone is convinced. Some have cast doubt on some of DeepSeek's claims, including tech mogul Elon Musk.
He responded to a post which claimed that DeepSeek actually has around 50,000 Nvidia chips that have now been banned from export to China, saying: "Obviously."He responded to a post which claimed that DeepSeek actually has around 50,000 Nvidia chips that have now been banned from export to China, saying: "Obviously."
The sudden explosion in popularity has prompted some to raise cyber security concerns.
In Australia, science minister Ed Husic was among the experts urging caution, telling Australia's national broadcaster ABC: "There are a lot of questions that will need to be answered in time on quality, consumer preferences, data and privacy management.
Sign up for our Tech Decoded newsletter to follow the biggest developments in global technology, with analysis from BBC correspondents around the world. Outside the UK? Sign up here.Sign up for our Tech Decoded newsletter to follow the biggest developments in global technology, with analysis from BBC correspondents around the world. Outside the UK? Sign up here.