By Reeturaj - Jan 31, 2025
US President Trump highlighted the emergence of Chinese AI model DeepSeek as a wake-up call for US tech companies. The rise of the low-cost AI model led to a stock plunge for US tech giants, with Nvidia experiencing its biggest one-day loss. DeepSeek quickly became the most downloaded free app in the US, challenging rivals with its cost-efficient large language AI model. Trump's AI advisor justified the White House's decision to reverse executive orders aimed at regulating AI development, emphasizing the need for US to win in the AI race. The event underscores the importance of investing in technological innovation for economic and national security reasons amid China's AI advancements.
Reuters via FMT
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US President Donald Trump highlighted the emergence of a Chinese artificial intelligence (AI) model, DeepSeek, as a significant development for American companies to consider. Speaking in Florida on Monday, Trump described the advancement by the Chinese startup as a “wake-up call” for the U.S. tech industry to strengthen its competitive edge. The emergence of Chinese artificial intelligence start-up rocked US tech giants’ stocks on Monday night amid concerns that the new low-cost AI model would upend their dominance. Tech shares plunged and chip maker Nvidia suffered falls of nearly 17% on Monday. Nvidia’s drop in share price marked the biggest ever one-day loss in market value on Wall Street, of about 589 billion dollars.
Just a week after its launch, DeepSeek quickly became the most downloaded free app in the US. It claims that its large language AI model was made at a fraction of the cost of its rivals, including OpenAI, which uses more expensive Nvidia chips to train its systems on vast swathes of data. The development is significant given the AI boom, ignited by ChatGPT's release in late 2022, has propelled Nvidia to become one of the world's most valuable companies. David Sacks, Trump's AI advisor and prominent tech investor, said DeepSeek's success justified the White House's decision to reverse executive orders, issued under Joe Biden, that established safety standards for AI development.
The regulations "would have hamstrung American AI companies without any guarantee that China would follow suit," Sacks wrote on X.Adam Kovacevich, CEO of the tech industry trade group Chamber of Progress, echoed the sentiment: "Now the top AI concern has to be ensuring (the United States) wins."
As the U.S. faces increasing pressure to match the speed of China’s AI advancements, the DeepSeek breakthrough serves as a reminder of the importance of continued investment in technological innovation. Trump’s statement underscores the urgency of ensuring the U.S. remains competitive in this critical area of industry, with both economic and national security implications.
