Saed News: The new Chinese AI, DeepSeek, has recently caused an earthquake in the tech world, mainly due to its innovative algorithm that enables AI deployment at minimal cost. This development has put major tech giants in crisis, as they have invested massive amounts in this field.
According to the Science and Technology Service of Saed News, quoting Fararu, the AI-powered assistant DeepSeek became the number one free download on Apple’s App Store on Monday. This development has simultaneously sparked concerns in global financial markets, as the emergence of a Chinese AI has led many investors to sell their shares in Western tech companies.
Global Investors Sell Tech Stocks Amid Fears Over China's Low-Cost AI Model DeepSeek
On Monday, global investors sold shares of technology companies due to concerns over the emergence of China's low-cost AI model, DeepSeek, which is seen as a threat to the dominance of leading AI firms like NVIDIA. This sell-off led to a $593 billion drop in NVIDIA’s market value, marking the largest single-day market loss for any company on Wall Street.
But why has DeepSeek disrupted the Western tech world so suddenly? What makes it so threatening to the Western AI industry? And how far can DeepSeek go in shaping the future of AI?
DeepSeek is an advanced AI model developed in China, designed as a homegrown alternative to Western models such as OpenAI’s ChatGPT and Google’s Gemini. It has gained attention due to its low development costs, reliance on Chinese-made hardware, and rapid advancements, but at the same time, it has alarmed Western tech giants.
One of the biggest concerns about DeepSeek is its significantly lower production and deployment costs compared to Western AI models.
Feat | Chinese AI (DeepSeek, Baidu, Tencent AI) | Western AI (OpenAI, Google, Meta) | |
---|---|---|---|
Data Processing Costs | Lower (Uses local servers and cheaper chips) | High (Relies on expensive NVIDIA servers and advanced cloud infrastructure) | |
Energy Consumption | Lower (More power-efficient models) | High (Requires high-power supercomputers) | |
Labor Costs | Lower (Cheaper workforce in China) | High (Expensive experts in the US & Europe) | |
Data Sources | Limited to Chinese and non-Western data (but optimized) | Requires extensive global datasets |
DeepSeek reportedly required only $6.5 million to develop, and even after purchasing 2,000 budget GPUs from NVIDIA, its total budget remained under $55 million. This figure pales in comparison to the hundreds of millions or even billions spent by Silicon Valley giants on AI development.
Western AI companies, such as OpenAI and Google, rely heavily on NVIDIA’s expensive chips (A100, H100), whereas China has developed its own AI chips—including Huawei’s Ascend and Loongson processors—reducing reliance on Western technology. This independence allows China to build highly competitive AI models at a fraction of the cost, challenging the profitability and market control of Western tech giants.
The West is also alarmed by China’s increasing self-sufficiency in AI technology. In the past, Chinese companies relied on Western hardware and cloud services to develop AI models. However, with the rise of DeepSeek and other domestic AI projects, China is rapidly reducing its dependence on companies like Microsoft, NVIDIA, and Google.
China’s government has also played a key role by heavily funding domestic AI initiatives and restricting foreign technology imports, further pushing local companies toward self-reliance. Strict data protection laws have also limited the influence of foreign AI models in China.
As DeepSeek advances, many countries that cannot access American AI models—due to sanctions, high costs, or geopolitical restrictions—might turn to Chinese alternatives.
Nations such as Russia, Iran, Brazil, and parts of Africa could adopt Chinese AI models, strengthening China’s position in the global AI race.
Unlike Western companies that restrict their AI services in some regions, Chinese AI models could operate without such barriers, further weakening US dominance in AI.
The rapid rise of DeepSeek has triggered massive financial losses for Western tech companies. As of this report:
The global tech market has lost over $1 trillion in value.
S&P 500 and Nasdaq fell by 1.5% and 3.1%, respectively.
NVIDIA’s stock dropped by 17%, wiping out $589 billion in market value.
Other major losses:
Broadcom: -16.5%
Taiwan Semi: -14.3%
ARM: -10%
AMD: -5.6%
Billionaires tied to AI investments suffered massive losses, with major stakeholders in NVIDIA, Oracle, Dell, and Binance losing $108 billion in combined wealth, according to Bloomberg.
Western AI firms have invested billions in their models and charge premium subscription fees (e.g., ChatGPT Plus at $20/month).
If DeepSeek and other Chinese models offer free or cheaper alternatives, millions of users—and even enterprises—could shift to Chinese AI, forcing OpenAI, Google, and Meta to lower prices, which would hurt their profits and further reduce their stock values.
A cheaper and equally capable AI model would:
✅ Provide greater access for developing countries.
✅ Reduce business expenses for corporations.
✅ Increase market penetration in new regions.
If China’s models match or exceed Western AI capabilities, users and companies might gradually abandon Western platforms.
The US government has already imposed strict chip export bans to slow China’s AI progress. However, these measures have backfired, pushing China to accelerate its domestic chip production.
By reducing reliance on Western technology, China is strengthening its AI capabilities rather than weakening them.
While DeepSeek and other Chinese AI models are growing fast, Western AI remains more advanced—for now. But if China closes the gap with cheaper models, the global AI landscape may split into two ecosystems:
Western AI (OpenAI, Google, Meta)
Chinese AI (DeepSeek, Baidu, Tencent)
The question remains: Will the future of AI be a battleground for global tech dominance, or will Western and Chinese AI coexist in separate spheres?