The launch of the Chinese AI chatbot DeepSeek yesterday affected US stock markets and, consequently, markets worldwide, causing a sharp drop in the shares of major tech companies.
DeepSeek’s model offers capabilities similar to OpenAI’s ChatGPT The startup behind the app, based in Hangzhou, did not have access to the more advanced H100 chips, as the US has banned their export to China since September 2022 as part of sanctions.but operates 20-50 times more cheaply, as it uses older-generation Nvidia chips (H800) compared to the H100 chips used by ChatGPT.
The startup behind the app, based in Hangzhou, did not have access to the more advanced H100 chips, as the US has banned their export to China since September 2022 as part of sanctions.
The app, which was #1 on the App Stores in the US and the UK over the weekend, was targeted by a cyber attack yesterday that restricted new registrations.
According to The Guardian DeepSeek’s success in creating an advanced AI model without access to the latest US technology has raised concerns about the effectiveness of the country’s efforts to limit China’s high-tech sector.
Unlike ChatGPT, DeepSeek is open source, meaning anyone can view the code (how it is built), modify or improve it, and share those changes with others.
Investors “punished” tech stocks, with the Nasdaq index, the exchange for tech stocks, closing down 3.1% ($1 trillion) yesterday. Nvidia, the maker of the chips, which had been the company with the highest market value in the US, experienced the largest stock drop in Wall Street history (17%), losing $600 billion in market value in a single day. Meanwhile, companies like Alphabet (Google) and Microsoft fell 4.2% and 2.1%, losing $100 billion and $7 billion, respectively.
