- Large US tech firms have vowed to spend billions developing AI hardware
American technology stocks fell significantly on Monday after a Chinese artificial intelligence start-up received huge demand for its chatbot.
DeepSeek’s new AI assistant topped the Apple app store’s download charts in China, the US and the UK over the weekend, surpassing rivals like Google’s Gemini and OpenAI’s ChatGPT.
Based in the eastern Chinese city of Hangzhou, DeepSeek claims its R1 AI open-source model uses fewer Nvidia chips and was developed for less than $6million.
The popularity of the firm’s app sent shockwaves throughout the American tech industry, leading shares in some famous names to fall.
Microsoft shares were down 3.7 per cent in early trading, while semiconductor maker ASML saw its shares slump 6.8 per cent and Nvidia shares experienced a massive 13 per cent drop.
Large-cap US tech businesses have committed to spending billions developing AI hardware in the coming years, partly motivated by pressure to compete with technological advancement in China.
Popular: Based in the eastern Chinese city of Hangzhou, DeepSeek claims its R1 AI open-source model uses fewer Nvidia chips and was developed for less than $6million
Just last week, a consortium of companies, including OpenAI, Oracle, and Softbank, announced a $500 billion plan called ‘Project Stargate’ to build new AI infrastructure in the US.
Swiss banking giant UBS estimates AI investment by the biggest US tech groups will reach $280billion in 2025, compared to $224billion last year.
However, the success of DeepSeek has left analysts questioning whether the enormous spending proposals would help the US maintain dominance in the AI sector.
‘DeepSeek’s success will serve to intensify the US/China AI war,’ said Ben Barringer, technology analyst at Quilter Cheviot.
‘It also provides a wake-up call and somewhat of a question mark on how much needs to be spent in order to build a model, and whether quite the level of CapEx we have been seeing is really required.’
The US Government has severely limited China’s access to chips and chipmaking equipment in recent years due to concerns regarding their use in AI and state-of-the-art weaponry.
Chinese companies have responded to these sanctions by sharing work with each other and focusing on developing more efficient, less expensive AI technologies.
Just before leaving office, US President Joe Biden announced a new global framework for the exporting of advanced computer chips that would limit the types of microchips different countries could receive.
Some of the US’s closest allies, such as Britain and Germany, would be exempted from restrictions, but 120 countries, including major trading partners like Mexico, would have limits on accessing existing chips.
Many prominent US tech firms warned that the rules could damage sales, supply chains and the prospects of their industry.
Russ Mould, investment director at AJ Bell, said: ‘The AI super-race is seeing new challengers emerge, and not everyone is going to win.
‘The companies that enjoyed first-mover advantage will now be under pressure to launch something even better or be left behind.
‘It’s natural evolution – when someone launches a product or service that sees strong demand, someone else will always try to come along with something cheaper to undercut the market leaders.’
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This article was originally published by a www.dailymail.co.uk . Read the Original article here. .