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US export controls on high-tech chips may have inadvertently fuelled the success of start-up DeepSeek’s AI chatbot, sparking fears in Washington there could be little it can do to stop China in the push for global dominance in AI.The firm, based in the eastern Chinese city of Hangzhou, has stunned investors and industry insiders with its R1 programme, which can match its American competitors seemingly at a fraction of the cost.That’s despite a strict US regime prohibiting Chinese firms from accessing the kinds of advanced chips needed to power the massive learning models used to develop AI.DeepSeek founder Liang Wenfeng has admitted the “embargo on high-end chips” has proved a major hurdle in its work. But while the curbs have long aimed to ensure US tech dominance, analysts suggest they may have spurred the firm to develop clever ways to overcome them.The company has said it used the less-advanced H800 chips — permitted for export to China until late 2023 — to power its large learning model.”The constraints on China’s access to chips forced the DeepSeek team to train more efficient models that could still be competitive without huge compute training costs,” George Washington University’s Jeffrey Ding told AFP.The success of DeepSeek, he said, showed “US export controls are ineffective at preventing other countries from developing frontier models”.”History tells us it is impossible to bottle up a general-purpose technology like artificial intelligence.”DeepSeek is far from the first Chinese firm forced to innovate in this way: tech giant Huawei has roared back into profit in recent years after reorienting its business to address US sanctions.But it is the first to spark such panic in Silicon Valley and Washington.Venture capitalist Marc Andreessen described it as a “Sputnik moment” — a reference to the Soviet satellite launch that exposed the yawning technology gap between the United States and its primary geopolitical adversary.- Fraction of the cost -For years many had assumed US supremacy in AI was a given, with the field dominated by big Silicon Valley names like OpenAI and Facebook-parent Meta.While China has invested millions and vowed to be the world leader in AI technology by 2030, its offerings were hardly enough to raise hackles across the Pacific.Tech giant Baidu’s attempt at matching ChatGPT, Ernie Bot, failed to impress on release — seemingly confirming views among many that Beijing’s stifling regulatory environment for big tech would prevent any real innovation.That was combined with a tough regime, spearheaded by the administration of Joe Biden, aimed at limiting Chinese purchases of the high-tech chips needed to power AI large language models.But DeepSeek has blown many of those ideas out of the water.”It’s overturned the long-held assumptions that many had about the computation power, the data processing that’s required to innovate,” Samm Sacks, a Research Scholar in Law and Senior Fellow at Yale Law School’s Paul Tsai China Center, told AFP.”And so the question is can we get cutting-edge AI at a fraction of the cost and a fraction of the computation?”While DeepSeek’s model emphasised cost-cutting and efficiency, American policy towards AI has long been based on assumptions about scale.”Throw more and more computing power and performance at the problem to achieve better and better performance,” according to George Washington University’s Ding.That’s the central idea behind President Donald Trump’s Stargate venture, a $500 billion initiative to build infrastructure for artificial intelligence led by Japanese giant SoftBank and ChatGPT-maker OpenAI.But the success of DeepSeek’s R1 chatbot — which its developers claim was built for just $5.6 million — suggest innovation can come much cheaper.Some urge caution, stressing the firm’s cost-saving measures might not be quite so innovative.”DeepSeek V3’s training costs, while competitive, fall within historical efficiency trends,” Lennart Heim, an associate information scientist at the RAND Corporation, told AFP, referring to R1’s previous iteration.”AI models have consistently become cheaper to train over time — this isn’t new,” he explained.”We also don’t see the full cost picture of infrastructure, research, and development.”- ‘Wake-up call’ -Nevertheless, Trump has described DeepSeek as a “wake-up call” for Silicon Valley that they needed to be “laser-focused on competing to win”.Former US Representative Mark Kennedy told AFP that DeepSeek’s success “does not undermine the effectiveness of export controls moving forward”.Washington could choose to fire the next salvo by “expanding restrictions on AI chips” and increased oversight of precisely what technology Chinese firms can access, he added.But it could also look to bolster its own industry, said Kennedy, who is now Director of the Wilson Center’s Wahba Institute for Strategic Competition.”Given the limitations of purely defensive measures, it may also ramp up domestic AI investment, strengthen alliances, and refine policies to ensure it maintains leadership without unintentionally driving more nations toward China’s AI ecosystem,” he said.Rebecca Arcesati, an analyst at Mercator Institute for China Studies (MERICS), told AFP “the very real fear of falling behind China could now catalyse that push”.

Taiwan will consider supporting its domestic industrythe government said Wednesday, after US President Donald Trump warned he will soon place tariffs on overseas-made semiconductor chips.The self-ruled island is a global power in the manufacturing of chips, which are used in products from Apple’s iPhones to Nvidia’s artificial intelligence hardware and are a key driver of its economy.”In the next day or two, we will urgently assess whether additional collaboration plans or support measures for the industry are needed,” Premier Cho Jung-tai told reporters.”Taiwan’s position in the global supply chain cannot be ignored, and we will continue to maintain this advantage.”Trump, who previously accused Taiwan of stealing the US chip industry, has threatened several key trade partners with tariffs in an attempt to drive companies to shift manufacturing to the United States.Speaking at a Republican congressional retreat in Miami on Monday, Trump warned the United States will soon place tariffs on foreign-made semiconductor chips, pharmaceuticals and metals such as steel.The levies could be implemented in the “very near future” so as to “return production of these essential goods to the United States of America”, he said.”They left us and they went to Taiwan… which is about 98 percent of the chip business… and we want them to come back,” he added.”The incentive is going to be they’re not going to want to pay a 25, 50 or even 100 percent tax.”Trump has previously criticised the CHIPS Act, a major law passed during former president Joe Biden’s tenure aimed at strengthening the US semiconductor industry and reducing the country’s reliance on Asian suppliers, including Taiwan.The United States finalised a deal to award Taiwanese chipmaking giant TSMC up to $6.6 billion in direct funding to help build “state-of-the-art facilities in Arizona”, officials said in November.Similar deals were struck with US chipmakers GlobalFoundries, Intel and South Korea’s SK Hynix before Trump took office, ensuring the funds can start flowing as companies reach milestones.TSMC, which is the world’s largest chipmaker, has long been under pressure to move more of its production away from Taiwan, where the bulk of its fabrication plants are located.While Taiwan is a self-ruled island, China claims it as part of its territory and has threatened to use force to bring it under its control.TSMC’s new factories overseas include three planned in the United States and one that opened in Japan last year.

Asian markets rose in holiday-thinned trade Wednesday, tracking a rally on Wall Street, where tech titans led by Nvidia recovered some of their hefty losses a day earlier as worries over Chinese AI startup DeepSeek subsided.Investors were also awaiting the conclusion of the Federal Reserve’s policy meeting later in the day as well as earnings from the likes of Microsoft and Tesla over the coming days.A sense of calm returned to trading floors after Monday’s rout, which was sparked by DeepSeek’s unveiling of its R1 chatbot that has apparently shown the ability to match the capacity of US AI pace-setters for a fraction of the investments made by American companies.The news hammered tech firms Monday, with US chip giant and market darling Nvidia collapsing almost 17 percent and wiping almost $600 billion from its market capitalisation — a record single-day loss for a publicly traded company.The firm has been at the forefront of a rush by investors into all things linked to AI, pushing it up around 1,900 percent in the past five years. However, Tuesday saw a tech sector rebound, with Nvidia climbing 8.8 percent as analysts said the selling may have been a little overdone and suggested a pullback in a recent rally may have been needed.Others said there were also doubts over whether DeepSeek’s AI was developed as cheaply as it claims.DeepSeek’s arrival raised questions about whether the vast sums of cash invested in AI in the past few years may have been overdone, but observers said the industry could benefit in the long term.Billionaire investment giant and founder of Point72 Asset Management Steve Cohen said the emergence of the startup could boost AI development.And Malik Ahmed Khan at Morningstar said he expected US companies to over time “replicate some of the AI techniques that DeepSeek leveraged to drive the cost of R1 down, as a means of reducing their own model training and inference costs, potentially lowering medium- to long-term capital expenditures”.All three main indexes rose Tuesday, with the Nasdaq putting on two percent and the S&P 500 almost one percent — both clawing back most of their losses.Tokyo followed suit, having taken a heavy hit over the previous two days as its chip companies tanked. There were also gains in Sydney, Wellington and Mumbai, though Bangkok dipped.Asia’s other markets were closed for holidays.The Fed’s policy meeting is expected to see it stand pat on interest rates but its post-meeting statement, and comments by boss Jerome Powell, will be pored over for an idea about the future as Donald Trump kicks off his second term.The US president has called on the bank to lower rates, but there are worries his plans to slash taxes, regulations and immigration — as well as impose tariffs on imports — will reignite inflation.The prospect of borrowing costs staying elevated boosted the dollar, which was given an extra lift Monday when Trump said he wanted universal tariffs “much bigger” than the 2.5 percent suggested by Treasury Secretary Scott Bessent.Traders are also awaiting the European Central Bank’s latest policy meeting, with some analysts expecting a small rate cut. – Key figures around 0630 GMT -Tokyo – Nikkei 225: UP 1.0 percent at 39,414.78 (close)Hong Kong – Hang Seng Index: Closed for a holidayShanghai – Composite: Closed for a holidayEuro/dollar: UP at $1.0438 from $1.0433 on TuesdayPound/dollar: UP at $1.2451 from $1.2440Dollar/yen: DOWN at 155.10 yen from 155.53 yen Euro/pound: DOWN at 83.83 pence from 83.84 pence West Texas Intermediate: DOWN 0.2 percent at $73.61 per barrelBrent North Sea Crude: DOWN 0.2 percent at $77.31 per barrelNew York – Dow: UP 0.3 percent at 44,850.35 (close)London – FTSE 100: UP 0.4 percent at 8,533.87 (close)

Japanese electronics and entertainment giant Sony Group said Wednesday that it has promoted Hiroki Totoki to chief executive officer as part of a wider management reorganisation.Totoki, 60, joined in 1987 and is currently Sony’s chief operating officer, finance chief and president. From April 1, he will succeed Kenichiro Yoshida, who will remain chairman, Sony said in a statement.It also announced “changes to its management structure to clarify management roles according to their responsibilities for the management of the entire Group or of each business”.This includes the appointment of Hideaki Nishino as president and CEO of the video games division and the designation of the heads of each division as a “Chief Officer”, it said.Yoshida and Totoki have overseen a greater focus on content — PlayStation games, anime, music and movies — which has helped Sony boost revenues and profits, Bloomberg News reported.”At our Corporate Strategy Meeting in May of last year, we newly announced our ‘Creative Entertainment Vision,’ which outlines where we want Sony to be in 10 years,” Totoki said in the statement.”Together with our employees, creators, partners, and our new leadership team, I will work to create a bright future filled with a boundless sense of Kando,” he said, referring to a Japanese concept of deriving enjoyment from creativity. 

US stocks and shares in chip-making giant Nvidia on Tuesday clawed back some of their losses following a steep sell-off a day earlier triggered by the sudden success of Chinese artificial intelligence firm DeepSeek.American tech shares tanked Monday, with Nvidia tumbling almost 17 percent, after China’s DeepSeek unveiled its R1 chatbot, which it claims can match the capacity of top US AI products for a fraction of their costs.Nvidia, which designs chips used in AI applications, clawed back gains of 8.9 percent on Tuesday, leaving it well below last week’s levels. All three major indices on Wall Street finished higher, with the Nasdaq Composite rising 2.0 percent buoyed by a rise in tech stocks, reversing some of its losses from Monday. Despite these gains, Briefing.com’s Patrick O’Hare noted that this was not a broad market advance.The rally was “probably more of a reflection of people embracing the idea that yesterday’s sell off in these mega cap and AI plays was overdone,” he said. Elsewhere, European stock markets were mixed while oil prices inched up, as traders awaited interest-rate decisions from the US Federal Reserve and European Central Bank this week.- Nvidia bounceback -Nvidia’s Monday plunge wiped close to $600 billion from its market capitalization — the largest single-day loss for a public company in stock market history.The Nvidia sell-off “may have gone too far,” said Kathleen Brooks, research director at XTB, adding that there were doubts over whether DeepSeek’s AI was developed as cheaply as it claims.”It may be too early to write off Nvidia yet, even though the prospect of a Chinese rival is causing a crisis for the chip maker,” she added.Gains in US equities last year were driven by a handful of large tech stocks led by Nvidia, and the wider stock market largely avoided Monday’s rout.”It’s difficult to work out if the worst is now over, or if yesterday’s slump was just another sign that the top is already in for US equities,” said David Morrison, senior analyst at Trade Nation.Earlier, Tokyo fell as AI-linked companies were pulled lower and new comments by US President Donald Trump rattled analysts.The dollar rose after Trump said Monday that he wanted universal tariffs “much bigger” than the 2.5 percent suggested by his newly-confirmed Treasury Secretary Scott Bessent, fanning fresh fears about a trade war.Trump said he wants high tariffs on imported metals, pharmaceuticals and semiconductors.Investors will turn their attention to interest-rate decisions this week.The Federal Reserve’s policy-making committee meets Wednesday and is largely expected to leave rates unchanged, despite Trump’s calls for lower interest rates from the independent US central bank.A day later, the European Central Bank will hold a press conference after its first meeting of the year, with some analysts expecting a small cut in lending rates. – Key figures around 2130 GMT -New York – Dow: UP 0.3 percent at 44,850.35 points (close)New York – S&P 500: UP 0.9 percent at 6,067.70 (close) New York – Nasdaq Composite: UP 2.0 percent at 19,733.59 (close)London – FTSE 100: UP 0.4 percent at 8,533.87 (close)Paris – CAC 40: DOWN 0.1 percent at 7,897.37 (close)Frankfurt – DAX: UP 0.7 percent at 21,430.58 (close)Tokyo – Nikkei 225: DOWN 1.4 percent at 39,016.87 (close)Hong Kong – Hang Seng Index: UP 0.1 percent at 20,225.11 (close)Shanghai – Composite: Closed for a holidayEuro/dollar: DOWN at $1.0433 from $1.0492 on MondayPound/dollar: DOWN at $1.2440 from $1.2496Dollar/yen: UP at 155.53 yen from 154.61 yen Euro/pound: DOWN at 83.84 pence from 83.94 pence Brent North Sea Crude: UP 0.5 percent at $77.49 per barrelWest Texas Intermediate: UP 0.8 percent at $73.77 per barrel

US stocks and shares in chip-making giant Nvidia on Tuesday clawed back some of their losses following a sell-off triggered by the sudden success of Chinese artificial intelligence firm DeepSeek.US tech shares tanked Monday, with Nvidia tumbling 17 percent, after China’s DeepSeek unveiled its R1 chatbot, which can apparently match the capacity of top US AI products for a fraction of their development costs.Nvidia, which designs chips used in AI applications, was up 2.8 percent in late morning trading, though still well below last week’s levels. The tech-heavy Nasdaq index was up around one percent after dropping more than three percent the previous day. The Dow and the wider S&P index were also higher, though lagging behind the Nasdaq. Elsewhere, European stock markets were mixed while oil prices inched up, as traders awaited interest-rate decisions from the US Federal Reserve and European Central Bank due this week.Nvidia’s Monday plunge wiped more than half a trillion dollars from its market capitalisation — the largest single-day loss in stock market history.The Nvidia sell-off “may have gone too far”, said Kathleen Brooks, research director at XTB, especially given some doubts over whether DeepSeek’s AI was developed as cheaply as it claims.”It may be too early to write off Nvidia yet, even though the prospect of a Chinese rival is causing a crisis for the chip maker,” she said.Gains in US equities last year were driven by a handful of large tech stocks, and the wider stock market largely avoided Monday’s rout. Nvidia has been the standout company leading a drive by investors to seek out all things AI while ignoring the massive sums it and companies such as Google and Microsoft are investing.”It’s difficult to work out if the worst is now over, or if yesterday’s slump was just another sign that the top is already in for US equities,” said David Morrison, senior analyst at Trade Nation.Boeing reported a hefty fourth-quarter loss of almost $4 billion due to labour strikes and manufacturing issues. But the aeroplane maker’s shares rallied more than four percent on hopes that early turnaround signs under a new CEO may bear fruit.General Motors reported a $3-billion quarterly loss Tuesday due to costs from restructuring a Chinese venture, and its shares dropped almost 10 percent even though the automaker had forecast higher profits this year.Microsoft and Facebook-parent Meta report Wednesday.Earlier, Tokyo fell as AI-linked companies were pulled lower and US President Donald Trump’s comments rattled analysts.The dollar rose after Trump said he wanted universal tariffs “much bigger” than the 2.5 percent suggested by his Treasury Secretary Scott Bessent, fanning fresh fears about a trade war.Trump said he wants high tariffs on imported metals, pharmaceuticals and semiconductors.Investors will turn their attention to interest-rate decisions this week.The US Federal Reserve’s policy-making committee meets Wednesday and is largely expected to leave rates unchanged, despite Trump’s calls for lower interest rates from the officially independent central bank.On Thursday, the European Central Bank will hold a press conference after its first meeting of the year, with some analysts expecting a small cut in lending rates. – Key figures around 1640 GMT -New York – Dow: UP 0.1 percent at 44,772.63 points New York – S&P 500: UP 0.4 percent at 6,036.52  New York – Nasdaq Composite: UP 1.1 percent at 19,544.97 London – FTSE 100: UP 0.4 percent at 8,533.87 (close)Paris – CAC 40: DOWN 0.1 percent at 7,897.37 (close)Frankfurt – DAX: UP 0.7 percent at 21,430.58 (close)Tokyo – Nikkei 225: DOWN 1.4 percent at 39,016.87 (close)Hong Kong – Hang Seng Index: UP 0.1 percent at 20,225.11 (close)Shanghai – Composite: Closed for a holidayEuro/dollar: DOWN at $1.0429 from $1.0492 on MondayPound/dollar: DOWN at $1.2438 from $1.2496Dollar/yen: UP at 155.65 yen from 154.61 yen Euro/pound: DOWN at 83.85 pence from 83.94 penceBrent North Sea Crude: UP 0.2 percent at $77.20 per barrelWest Texas Intermediate: UP 0.2 percent at $73.30 per barrel

Japanese tech firms sank Tuesday following a rout on Wall Street after China’s DeepSeek chatbot upended the artificial intelligence sector and sparked questions about huge investments by US titans.The dollar rallied on a report saying Washington was considering universal tariffs on a range of goods, fanning fresh fears about a trade war. Other Asian equity indices ended mixed in limited trade ahead of the Lunar New Year break.European stock markets rose in morning deals and oil prices advanced, as traders awaited interest-rate decisions from the US Federal Reserve and European Central Bank due this week.Tokyo-listed companies linked to the artificial intelligence sector tanked for a second straight day as investors tracked a rout on Wall Street that saw Nvidia crumble 17 percent, wiping more than half-a-trillion dollars off its market capitalisation.The retreat came after DeepSeek unveiled its R1 chatbot, which has apparently shown the ability to match the capacity of US AI pace-setters for a fraction of the investments made by American companies. “The DeepSeek news has triggered a rethink on the AI revolution and arguably one of the pillars of the current US exceptionalism,” said Rodrigo Catril, foreign exchange strategist at National Australia Bank.”If R1 is as good as first impressions seem to suggest, then demand for sophisticated chips, infrastructure (think data centres) and energy may not be as large as originally thought.”Nvidia has been the standout company that has led the drive by investors to seek out all things AI, spending vast sums of cash but seeing their share prices rocket.The US chip firm has piled on about 1,900 percent in five years.The DeepSeek bombshell also came on the heels of President Donald Trump’s announcement of a new $500 billion venture to build infrastructure for artificial intelligence in the United States.Trump said the release of DeepSeek’s model “should be a wake-up call for our industries that we need to be laser-focused on competing to win”.He argued that it could be a “positive” for US tech giants.”Instead of spending billions and billions, you’ll spend less, and you’ll come up with hopefully the same solution,” he said.Sam Altman, the boss of OpenAI, which runs lead US chatbot ChatGPT, called DeepSeek “impressive”.Wall Street’s Nasdaq index filled with tech stocks tanked more than three percent and the S&P 500 more than one percent Monday, with another US chip-maker, Broadcom, off 17.4 percent.The selling in Tokyo extended into Tuesday, with the Nikkei ending down 1.4 percent. In the semiconductor sector, Advantest plunged more than 11 percent, while Tokyo Electron shed 5.7 five percent and Disco Corporation almost three percent.Tech investor SoftBank, which is a key investor in Trump’s AI project, tumbled more than five percent, having lost more than eight percent the day before.- Greenback rally -The dollar pushed higher after the Financial Times reported that US Treasury Secretary Scott Bessent was looking to impose universal tariffs of 2.5 percent on goods initially and lifting them by the same amount each month. It said the move would give room for negotiations with the White House but the tariffs could go as high as 20 percent. The report comes after Trump rattled confidence Sunday by a row with Colombia over deportations, in which the president said he would hit the country with 25 percent levies.Bogota backed down after a short standoff, but analysts said the development highlighted the president’s willingness to weaponise tariffs.- Key figures around 0945 GMT -London – FTSE 100: UP 0.6 percent at 8,550.13 pointsParis – CAC 40: UP 0.3 percent at 7,932.00Frankfurt – DAX: UP 0.4 percent at 21,365.92Tokyo – Nikkei 225: DOWN 1.4 percent at 39,016.87 (close)Hong Kong – Hang Seng Index: UP 0.1 percent at 20,225.11 (close)Shanghai – Composite: Closed for a holidayNew York – Dow: UP 0.7 percent at 44,713.58 (close)Euro/dollar: DOWN at $1.0442 from $1.0492 on MondayPound/dollar: DOWN at $1.2451 from $1.2496Dollar/yen: UP at 155.47 yen from 154.61 yen Euro/pound: DOWN at 83.87 pence from 83.94 penceBrent North Sea Crude: UP 0.5 percent at $76.48 per barrelWest Texas Intermediate: UP 0.5 percent at $73.55 per barrel

Chinese startup DeepSeek, which has sparked panic on Wall Street with its powerful new chatbot developed at a fraction of the cost of its competitors, was founded by a hedgefund whizz-kid who believes AI can change the world.Based out of the eastern Chinese city of Hangzhou — sometimes known as “China’s Silicon Valley” — DeepSeek has come seemingly out of nowhere to release a cutting-edge product.But in China it was already making waves, last year dubbed the “Pinduoduo of AI” — a reference to a popular online shopping app that steamrolled big players like Alibaba with its low prices.DeepSeek has won plaudits for its cost-effectiveness and praise in China for its seeming ability to navigate US sanctions that have aimed to prevent access to the high-tech chips needed to power the AI revolution.AFP paid visits to the firm’s offices in both Hangzhou and the capital Beijing on Tuesday, but offices appeared closed for the Lunar New Year holidays.The firm is the child of tech and business prodigy Liang Wenfeng, born in 1985 and an engineering graduate of Hangzhou’s prestigious Zhejiang University, where he has said he became convinced “artificial intelligence would change the world”.He spent years trying to work out how to apply AI to a number of different fields, according to an interview with Chinese investment news outlet Waves last year.But he eventually struck gold with High-Flyer, a quantitative investing firm specialising in using AI to analyse stock market patterns.That technique brought in tens of billions of yuan in assets managed, and made it one of China’s top quantitative hedge funds.”We just do things according to our own pace, then calculate costs and prices,” Liang told Waves.”Our principle is to not subsidise or make a huge profit.”- ‘More a geek than a boss’ -For Liang, DeepSeek was always a passion project.In 2021, the Financial Times reported, he began purchasing Nvidia graphic processing units for a side project — an account also featured in a local media report on the firm.Associates told Waves he is “not at all like a boss and much more like a geek”, with a “terrifying ability to learn”.And his passion project has now shocked industry experts and triggered a plummet in the shares of US chip-making giant Nvidia.It also brought Liang right into the corridors of power.Last week, he appeared in a lineup of other key business representatives meeting with China’s second-ranking leader, Premier Li Qiang, at a seminar to solicit opinions on the government’s economic work for the year ahead.Footage of the meeting from Chinese state broadcaster CCTV showed a moppy-haired Liang wearing thick-rimmed glasses addressing Li, who sat listening intently from his chair opposite.- ‘Wake-up call’ -Beijing has good reason to be pleased: DeepSeek’s success called into question the vast sums of money funnelled by tech giants into developing advanced generative AI, as well as the ability of Western sanctions to prevent Chinese competitors from keeping up — or even winning.US President Donald Trump said it was a “wake-up call” for Silicon Valley, and tech investor and ally Marc Andreessen declared it was “AI’s Sputnik moment”.It also amplified calls for Washington to get even tougher on restricting Chinese firms from getting hold of high-tech chips.In his interview with Waves, Liang acknowledged that the toughest obstacle has been those US curbs. “Money has never been the problem we face; it’s the embargo on high-end chips,” he said.But beyond the geopolitics, the “geeky” AI guru said he hoped the technology could help us understand deeper things about the human mind.”We hypothesize that the essence of human intelligence might be language, and human thought could essentially be a linguistic process,” he said.”What you think of as ‘thinking’ might actually be your brain weaving language.”

Having shattered assumptions in the tech sector and beyond about the cost of artificial intelligence, Chinese startup DeepSeek’s new chatbot is now roiling another industry: energy companies.The firm says it developed its open-source R1 model using around 2,000 Nvidia chips, just a fraction of the computing power generally thought necessary to train similar programmes.That has significant implications not only for the cost of developing AI, but also the energy for the data centres that are the beating heart of the growing industry.The AI revolution has come with assumptions that computing and energy needs will grow exponentially, resulting in massive tech investments in both data centres and the means to power them, bolstering energy stocks.Data centres house the high-performance servers and other hardware that make AI applications work.So might DeepSeek represent a less power-hungry way to advance AI?Investors seemed to think so, fleeing positions in US energy companies on Monday and helping drag down stock markets already battered by mass dumping of tech shares.Constellation Energy, which is planning to build significant energy capacity for AI, sank more than 20 percent.”R1 illustrates the threat that computing efficiency gains pose to power generators,” wrote Travis Miller, a strategist covering energy and utilities for financial services firm Morningstar.”We still believe data centers, reshoring, and the electrification theme will remain a tailwind,” he added.But “market expectations went too far.”- Nuclear ambitions -In 2023 alone, Google, Microsoft and Amazon ploughed the equivalent of 0.5 percent of US GDP into data centres, according to the International Energy Agency (IEA).Data centres already account for around one percent of global electricity use, and a similar amount of energy-related greenhouse gas emissions, the IEA says.Efficiency improvements have so far moderated consumption despite growth in data centre demand.But the IEA projects global electricity use by data centres could double from 2022 figures by next year, to around Japan’s annual consumption.That growing demand is unevenly spread.Data centres accounted for about 4.4 percent of US electricity consumption in 2023, a figure that could reach up to 12 percent by 2028, according to a report commissioned by the US Department of Energy.Last year, Amazon, Google and Microsoft all made deals for nuclear energy, either from so-called Small Modular Reactors or existing facilities.Meta meanwhile has signed contracts for renewable energy and announced it is seeking proposals for nuclear energy supplies.For now though, data centres generally rely on electricity grids that are often heavily dependent on fossil fuels.- ‘Jevons paradox strikes again!’ -Data centres also suck up significant amounts of water, both indirectly due to the water involved in electricity generation, and directly for use in cooling systems.”Building data centres requires lots of carbon in the production of steel and also lots of carbon-intensive mining and production processes for creating the computing hardware to fill them,” said Andrew Lensen, senior lecturer in artificial intelligence at Victoria University of Wellington.”So if DeepSeek was to replace models like OpenAI’s… there would be a net decrease in energy requirements.”However, increasing efficiency in technology often simply results in increased demand — a proposition known as the Jevons paradox.”Jevons paradox strikes again!” Microsoft CEO Satya Nadella wrote on X on Monday.”As AI gets more efficient and accessible, we will see its use skyrocket, turning it into a commodity we just can’t get enough of,” he added.Lensen also pointed out that DeepSeek uses a “chain-of-thought” model that is more energy-intensive than alternatives because it uses multiple steps to answer a query.These were previously too expensive to run, but could now become more popular because of efficiencies.Lensen said DeepSeek’s impact might be to help US companies learn “how they can use the computational efficiencies to build even larger and more performant models”.”Instead of making their model 10 times smaller and efficient with the same level of performance, I think they’ll use the new findings to make their model more capable at the same energy usage.”

Fears of upheaval in the AI gold rush rocked Wall Street on Monday following the emergence of a popular ChatGPT-like model from China, with US President Donald Trump saying it was a “wake-up call” for Silicon Valley.Last week’s release of the latest DeepSeek model initially received limited attention, overshadowed by the inauguration of Trump on the same day.However, over the weekend, the Chinese artificial intelligence startup’s chatbot surged to become the most downloaded free app on Apple’s US App Store, displacing OpenAI’s ChatGPT.What truly rattled the industry was DeepSeek’s claim that it developed its latest model, the R1, at a fraction of the cost that major companies are investing in AI development, primarily on expensive Nvidia chips and software.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.The news sent shockwaves through the US tech sector, exposing a critical concern: should tech giants continue to pour hundreds of billions of dollars into AI investment when a Chinese company can apparently produce a comparable model so economically?DeepSeek’s apparent advances were a poke in the eye to Washington and its priority of thwarting China by maintaining US technological dominance.Trump reacted quickly on Monday, saying the DeepSeek release “should be a wake-up call for our industries that we need to be laser-focused on competing to win.”He argued it could be a “positive” for US tech giants, adding: “instead of spending billions and billions, you’ll spend less, and you’ll come up with hopefully the same solution.”OpenAI chief executive Sam Altman said in a post on X that it was “legit invigorating to have a new competitor.”He called DeepSeek’s R1 “an impressive model, particularly around what they’re able to deliver for the price,” and pledged to speed up some OpenAI releases.The development comes against the background of a US government push to ban Chinese-owned TikTok in the United States or force its sale.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.”Tech investor and Trump ally Marc Andreessen declared “Deepseek R1 is AI’s Sputnik moment,” referencing the 1957 launch of Earth’s first artificial satellite by the Soviet Union that stunned the Western world.”If China is catching up quickly to the US in the AI race, then the economics of AI will be turned on its head,” warned Kathleen Brooks, research director at XTB, in a note to clients.Microsoft CEO Satya Nadella took to social media hours before markets opened to argue less expensive AI was good for everyone.But last week at the World Economic Forum in Davos, Nadella warned: “We should take the developments out of China very, very seriously.”Australia’s Science Minister Ed Husic raised privacy concerns, urging users to think carefully before downloading the chatbot.”There are a lot of questions that will need to be answered in time on quality, consumer preferences, data and privacy management,” Husic told national broadcaster ABC.”I would be very careful about that. These type of issues need to be weighed up carefully.” Microsoft, an eager adopter of generative AI, plans to invest $80 billion in AI this year, while Meta announced at least $60 billion in investments on Friday.- ‘Outplayed’ -Much of that investment goes into the coffers of Nvidia, whose shares plunged a staggering 17 percent on Monday.The situation is particularly remarkable since DeepSeek, as a Chinese company, lacks easy access to Nvidia’s state-of-the-art chips after the US government placed export restrictions on them.The export controls are “driving startups like DeepSeek to innovate in ways that prioritize efficiency, resource-pooling, and collaboration,” wrote the MIT Technology Review.Elon Musk, who has invested heavily in Nvidia chips for his company xAI, suspects DeepSeek of secretly accessing banned H100 chips — an accusation also made by the CEO of ScaleAI, a prominent Silicon Valley startup backed by Amazon and Meta.But such accusations “sound like a rich kids team got outplayed by a poor kids team,” wrote Hong Kong-based investor Jen Zhu Scott on X.In a statement, Nvidia said DeepSeek’s technology was “fully export control compliant.”