How worried should we be about the AI arms race?

Chinese startup DeepSeek sent shockwaves through Silicon Valley this week. Io Dodds investigates what it could mean for tech HOSSES, chatbot users and expendable workers

- Io Dodds

It’s not often that nearly $600bn (£483bn) gets wiped off the share value of a corporation in a single day. In fact, it has never happened before. Such was the dubious honour of Nvidia, an AIfocused chipmaker and the world’s most valuable company, when it became the biggest casualty of a $1 trillion stock market wipeout on Monday. The reason? A breakout chatbot app from a Chinese AI startup called DeepSeek, which claimed, with its new “R1” model, to have rivalled the performance of the most advanced American models at a tiny fraction of the cost.

What’s more, R1’s “weights” – the constellation of statistical connections that defines its understanding of the world – were published with an open-access licence, meaning anyone with the requisite hardware can run their own version.

Coming on the tail of several further advances by DeepSeek and other Chinese companies, including TikTok’s owner ByteDance, it set off a feverish reaction among some US tech leaders. “Deepseek R1 is AI’s Sputnik moment,” said venture capitalist Marc Andreessen. “[We’re] in panic mode,” said one anonymous AI worker at Meta, which owns Facebook and Instagram.

“[Chinese] companies have consistently been behind the US state of the art [in the AI field] by maybe six months to a year,” Noah Jacobson, a corporate AI researcher in San Francisco who previously worked for Amazon, explains. “I feel like DeepSeek is the first time that China has produced a model that appears to be on par.”

That is worrying news for US incumbents such as OpenAI, the maker of ChatGPT, which have bet heavily on the sheer expense of making and running AI models, keeping their competitors at bay.