Deepseek is a “Wake-Up Call” for US Tech Firms According to Trump

Marco Lancaster

January 28, 2025

As reported by BBC, U.S. President Donald Trump called the rise of Chinese company DeepSeek “a wake-up call” for the U.S. tech industry. The launch of DeepSeek’s AI model caused big changes on Wall Street, making investors uneasy.

Shares of major tech companies, including Nvidia, dropped sharply. Nvidia alone lost nearly $600 billion in market value, showing how serious the challenge from DeepSeek is.

DeepSeek says its R1 model was made for just $6 million (£4.2 million), much less than what others spend. This claim has surprised many in the industry and raised concerns about how U.S. companies will stay on top of AI. Some experts, however, question if DeepSeek’s cost claims are accurate.

DeepSeek is also popular with users. Within a week, its app became the most downloaded free app in the U.S., showing how quickly it has gained attention.

Reactions from the U.S. and Beyond

President Trump said the advancements in China’s AI could help the U.S. “If you can get the same results for less money, that’s a good thing for us,” he said while traveling on Air Force One. He also said he believes the U.S. will stay ahead in AI.

At the same time, DeepSeek has caused worries about cybersecurity. Australian Science Minister Ed Husic warned about risks, saying issues like quality, trust, and data privacy need attention. DeepSeek’s rise comes as the U.S. limits the sale of advanced chips to China. To keep working without those chips, Chinese developers have shared ideas and tried new ways to build AI. These efforts have created AI models that use less computing power, making them cheaper.

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This change is shaking up the tech industry, as these lower-cost models could disrupt how things work today.

Read Also: DeepSeek: free ChatGPT competitor from China and how to use it

Market Reactions

After the U.S. markets reacted strongly on Monday, the FTSE 100 index in the UK rose slightly by 0.46% on Tuesday. Nasdaq futures in the U.S. also showed a small increase, with Nvidia stock recovering slightly in after-hours trading.

In Japan, the reaction was different. Shares of AI-related companies like Advantest, Softbank, and Tokyo Electron dropped sharply, causing the Nikkei 225 index to fall by 1.4%. Many Asian markets, including China, are closed for the Lunar New Year holiday. China’s financial markets will reopen on February 5, leaving the full impact of DeepSeek’s rise still to be seen.

Who Founded Deepseek?

DeepSeek was founded in 2023 by Liang Wenfeng in Hangzhou, a city in southeastern China. Liang, 40, graduated in information and electronic engineering and also established the hedge fund that supported DeepSeek.

Recently, Liang attended a meeting with industry experts and Chinese Premier Li Qiang, highlighting his growing influence in the tech sector.

In a July 2024 interview with The China Academy, Liang shared his surprise at the reaction to an earlier version of his AI model. “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.”

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Source/VIA :

BBC