Billy Perrigo and Tharin Pillay
A new Chinese AI model, created by the Hangzhou-based startup DeepSeek, has stunned the American AI industry by outperforming some of OpenAI’s leading models, displacing ChatGPT at the top of the iOS app store, and usurping Meta as the leading purveyor of so-called open source AI tools. All of which has raised a critical question: despite American sanctions on Beijing’s ability to access advanced semiconductors, is China catching up with the U.S. in the global AI race?
At a supposed cost of just $6 million to train, DeepSeek’s new R1 model, released last week, was able to match the performance on several math and reasoning metrics by OpenAI’s o1 model – the outcome of tens of billions of dollars in investment by OpenAI and its patron Microsoft.
The Chinese model is also cheaper for users. Access to its most powerful versions costs some 95% less than OpenAI and its competitors. The upshot: the U.S. tech industry is suddenly faced with a potentially cheaper and more powerful challenger, unnerving investors, who sold off American tech stocks on Monday morning.
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