Chinese state-backed social media accounts played a key role in amplifying the launch of DeepSeek’s AI models last week, according to an analysis by the firm Graphika. These accounts, including those of Chinese diplomats and media outlets, used platforms like X (formerly Twitter), Facebook, Instagram, and Weibo to highlight DeepSeek’s challenge to US dominance in the AI sector. This online activity coincided with a significant drop in US tech stocks, including a record one-day loss for Nvidia, shedding $593 billion in market value.
Graphika’s report suggested that this was part of a broader strategy by China to use AI to enhance its global influence and counter American leadership in critical technological fields. The surge in online discussion about DeepSeek’s AI capabilities was noticeable, especially on X, where it surpassed US rival ChatGPT in downloads from Apple’s app store shortly after its release. DeepSeek’s AI assistant also claimed to have been developed at a much lower cost than US competitors, raising concerns about a potential price war in the sector.
While China celebrates DeepSeek’s advancements as a victory over US efforts to limit its tech growth, the US has raised suspicions about whether the company improperly accessed American technology. The Commerce Department is investigating whether DeepSeek used banned US chips in its models, further intensifying tensions between the two countries over AI and tech competition. Meanwhile, major US companies like Microsoft and Meta continue their AI investments despite the challenges.
Taiwan’s digital ministry has instructed government departments not to use DeepSeek’s artificial intelligence service due to security concerns. The warning highlights ongoing fears about Chinese technology, given Beijing’s claims over Taiwan and its political and military threats.
Authorities cited potential risks from cross-border data transmission and information leaks, describing DeepSeek as a threat to national security. The ministry pledged to monitor technological developments and adjust security policies accordingly.
DeepSeek’s AI assistant recently surpassed ChatGPT in downloads from Apple’s App Store. Global investors responded by selling US tech stocks, causing Nvidia’s market value to drop by $593 billion in a historic single-day loss.
Pressure is mounting on the Trump administration to impose stricter export controls on Nvidia’s AI chips following concerns over China’s DeepSeek. A bipartisan call from lawmakers John Moolenaar and Raja Krishnamoorthi urges officials to assess the national security risks linked to the firm’s reliance on advanced US technology.
A letter addressed to National Security Advisor Michael Waltz highlights that DeepSeek’s latest AI model has extensively used Nvidia’s H20 chips, which remain outside current export restrictions. The request forms part of a wider review into US export policies in response to strategic threats.
Concerns in Washington are growing over China’s rapid AI advancements, with the US House of Representatives warning against using DeepSeek’s technology. Officials fear AI could bolster cyber threats or facilitate bioweapons development, leading to increasing efforts to limit China’s access to cutting-edge chips.
Nvidia has stated that its products fully comply with US regulations and expressed willingness to work with authorities. Reports indicate that Trump’s administration is already considering new restrictions on H20 chip exports to China as part of its evolving AI security strategy.
Bitcoin experienced a 6% drop on 27 January, as stock markets reacted to the debut of China’s open-source AI model, DeepSeek, which some have dubbed ‘AI’s Sputnik moment.’ The new model developed on a modest budget of just under $6 million, raised concerns in US markets as it posed a competitive threat to American AI giants like OpenAI. The surprise launch led to significant losses across tech stocks, including Nvidia, Apple, and Tesla, with Nvidia seeing a record-breaking 17% drop. Energy stocks, which had relied on revenue from power-intensive US AI models like ChatGPT, also suffered.
While the impact on Bitcoin and other cryptocurrencies may seem directly linked to DeepSeek, experts suggest the broader market sentiment played a bigger role. Cryptocurrency, often seen as a “risk-on” asset, typically mirrors the movements in stock markets. As investor fears triggered sell-offs, major coins like Bitcoin and Ether saw their values fall alongside tech stocks. Despite the dip, some analysts remain optimistic, noting that Bitcoin’s quick recovery amidst a broader market decline signals positive prospects.
DeepSeek’s impact on Bitcoin, however, seems minimal in the long run. The open-source nature of the AI model allows others to incorporate its innovations into their own developments, potentially accelerating AI progress worldwide. While concerns about DeepSeek’s political and privacy implications linger, particularly in the US and EU, the model is expected to drive advancements in AI at a lower cost. Yet, its influence on crypto markets is likely to remain limited, with institutional investors continuing to view cryptocurrencies as a risk-heavy asset class.
Samsung Electronics has warned of weak sales for its AI chips in the first quarter, citing US export restrictions on high-bandwidth memory (HBM) chips to China. These restrictions, combined with the company’s struggle to meet Nvidia’s HBM chip requirements, are expected to impact demand. Samsung’s reliance on Chinese customers for about 20% of its HBM sales makes it particularly vulnerable. Despite this, the company plans to release upgraded HBM3E products in March to address shifting market demands.
The company also reported a 29% drop in operating profit for the fourth quarter, totalling 6.5 trillion won ($4.48 billion). Samsung expects limited earnings growth in the first quarter, driven by sluggish demand in the memory chip market, particularly for smartphones and personal computers. In addition, delays in GPU production, mainly due to strong demand and engineering challenges, have affected memory chip requirements for servers in data centres.
Samsung’s mobile phone division also faced challenges, with a 22% drop in operating profit in the fourth quarter. The company’s decision to use Qualcomm’s application processors instead of its own Exynos chips for the Galaxy S25 lineup has weakened its position in the mobile chip market. Despite these hurdles, Samsung anticipates a recovery in the memory market by the second quarter, depending on its ability to supply Nvidia with advanced HBM3E chips.
While competitors SK Hynix and TSMC have benefitted from the AI boom, with record profits, Samsung’s performance in the AI chip market has fallen behind. The company’s future performance will heavily depend on its ability to secure a stronger foothold in the rapidly growing AI sector.
DeepSeek, a Chinese tech company, has made waves in the AI sector with a breakthrough that challenges the dominance of US tech giants. The company claims it can develop AI models that rival or surpass Western counterparts at a fraction of the cost, sparking concerns about America’s lead in the industry. In response, the CEOs of Microsoft and Meta have defended their substantial investments in AI infrastructure, emphasising that such spending is necessary to meet growing demand and stay competitive.
Microsoft and Meta have committed billions to AI, with Microsoft earmarking $80 billion for the current fiscal year and Meta pledging up to $65 billion. Both companies argue that expanding their computing networks is critical to addressing the increasing demands of AI applications. Microsoft’s CEO Satya Nadella highlighted the need to overcome capacity constraints, while Meta’s Mark Zuckerberg stressed that heavy investment would give them a strategic advantage over time.
Despite these bold investments, there are signs of investor frustration. Microsoft’s shares recently fell 5% following disappointing growth forecasts for its cloud business, and Wall Street analysts are calling for clearer plans on how these investments will translate into profits. Meta also sent mixed signals, reporting a strong fourth quarter but offering a weak sales outlook, leaving some to question the long-term payoff of their AI ventures.
There are indications that both companies may adjust their approach. Microsoft’s CFO, Amy Hood, noted that while they will continue investing in AI, the pace of spending will slow in the coming years, signalling a shift towards more sustainable growth. As the AI race heats up, it remains to be seen whether these large investments will eventually lead to the anticipated returns.
India’s IT minister, Ashwini Vaishnaw, has praised the Chinese startup DeepSeek for its breakthrough in affordable AI, which has disrupted the sector with a powerful model costing just $5.5 million. He likened DeepSeek’s efficient approach to his government’s efforts to develop a local AI model through the IndiaAI mission, a $1.25 billion initiative to support AI startups and infrastructure development in India.
DeepSeek’s rapid success, claiming it took just two months to build its model using Nvidia’s H800 chips, has challenged the belief that China lags behind the US in AI. The startup’s app recently surpassed OpenAI’s ChatGPT in downloads on the Apple App Store, further highlighting its impact. Vaishnaw’s comments were seen as a response to remarks made by OpenAI’s CEO Sam Altman, who had previously expressed doubts about India’s ability to compete in the AI space with a $10 million budget.
Vaishnaw pointed out that while some questioned the government’s large AI investment, DeepSeek’s achievements prove that significant results can be achieved with more modest spending. As Altman prepares to revisit India in early February, his comments from last year continue to stir debate online, especially following DeepSeek’s unexpected success in the AI race.
Altman’s visit coincides with ongoing legal issues for OpenAI in India, as the company is engaged in a copyright dispute with local digital news and book publishers. The growing attention on AI developments in India underscores the shifting dynamics in the global AI race.
Top White House advisers have raised concerns over China’s DeepSeek using a technique known as “distillation” to potentially replicate US AI models, a method where one AI system learns from another. This could allow DeepSeek to benefit from the extensive investments made by US rivals, such as OpenAI, without incurring the same costs. DeepSeek recently made waves by releasing an AI model that rivals those of US giants, at a fraction of the cost, and giving away the code for free. US tech companies, including OpenAI, are now investigating whether DeepSeek’s model may have improperly used this distillation method.
Distillation, while common in the AI industry, may violate the terms of service of models like OpenAI’s. The technique allows a newer, smaller model to benefit from the learnings of a larger, more advanced one, often without detection, especially when using open-source models. Industry experts have pointed out that blocking such practices is difficult, particularly with freely available models like Meta’s Llama and French startup Mistral’s offerings. Some US tech executives, however, are advocating for stricter export controls and customer identification measures to limit such activities.
Despite the concerns, DeepSeek has not responded to the allegations, and OpenAI has stated it will work with the US government to protect its intellectual property. However, as AI technology continues to evolve, finding a way to prevent distillation may prove to be a complex challenge. The ongoing debate highlights the growing tensions between the US and China over the use of AI and other advanced technologies.
DeepSeek’s AI assistant has surged ahead of competitors, overtaking ChatGPT in downloads on Apple’s App Store. The Chinese startup’s success has raised concerns among US tech firms while sparking national pride in China. Many see it as a symbol of the country’s resilience against Washington’s tech restrictions.
The company’s ability to offer AI services at a lower cost than OpenAI has prompted discussions about the future of US firms like Nvidia and Microsoft. State media and local commentators have celebrated the achievement, with some arguing it proves US containment efforts have failed. A widely shared article from Zhejiang’s provincial media office argued that China can compete on equal footing in technological innovation.
Public sentiment echoes reactions to Huawei’s surprise 2023 smartphone release, which was seen as defying US sanctions. Social media users have expressed pride in DeepSeek’s rise, with many hoping the country’s AI sector will continue advancing. Some view it as evidence of China’s growing strength in AI.
France‘s data protection authority, the CNIL, announced it will question DeepSeek to better understand how the Chinese company’s AI system operates and assess potential privacy risks for users. The move comes as European regulators intensify scrutiny of AI, following concerns raised by Italy and Ireland over DeepSeek’s handling of personal data.
DeepSeek recently gained international attention after revealing its latest AI model, DeepSeek-V3, was trained using less than $6 million worth of Nvidia H800 computing power. European authorities have been particularly vigilant about data protection, with the EU’s General Data Protection Regulation (GDPR) setting stringent standards for privacy. Under GDPR, violations can result in fines of up to 4% of a company’s global turnover.
The CNIL’s investigation follows a broader European push to regulate AI technology, with new rules imposing strict transparency obligations on high-risk AI systems. Other countries, such as Italy and Ireland, have also launched inquiries into DeepSeek, reflecting growing concerns over AI’s implications for data privacy across the continent.
