DeepSeek changes rules of AI’s great game

{"text":[[{"start":8.52,"text":"It is hard to talk about 21st-century economic history without discussing the “China shock”. "},{"start":13.699,"text":"That is the term often used to describe China’s entrance into the global market, a change that brought rich countries an abundance of cheap goods, but left entire industries and workforces mothballed. "}],[{"start":23.82,"text":"DeepSeek may provide a sequel. "},{"start":26.124,"text":"A little-known Chinese hedge fund has thrown a grenade into the world of artificial intelligence with a large language model that, in effect, matches the market leader, Sam Altman’s OpenAI, at a fraction of the cost. "},{"start":37.354,"text":"And while OpenAI treats its models’ workings as proprietary, DeepSeek’s R1 wears its technical innards on the outside, making it attractive for developers to use and build on. "}],[{"start":null,"text":"

"}],[{"start":47.8,"text":"Things move faster in the AI age; terrifyingly so. "},{"start":51.678999999999995,"text":"Five of the biggest technology stocks geared to AI — chipmaker Nvidia and so-called hyperscalers Alphabet, Amazon, Microsoft and Meta Platforms — collectively shed almost $750bn of market value before US markets opened on Monday. "},{"start":66.122,"text":"It could be particularly grim for Nvidia if it proves true that DeepSeek won without the use of its shiniest chips. "}],[{"start":73.15,"text":"Investors in tech companies, including Europeans such as chipmaker ASML, and energy companies that investors hoped would get a boost from fuelling data centres, are left wondering whether their investments will go up in smoke. "},{"start":85.06700000000001,"text":"The hyperscalers were due to plough almost $300bn into capital expenditure this year, according to Visible Alpha estimates. "},{"start":92.147,"text":"Analysts expect that on Wednesday, when they report earnings, Meta and Microsoft will report investment for 2024 totalling $94bn. "}],[{"start":null,"text":""}],[{"start":100.91000000000001,"text":"In truth, the game is not over. "},{"start":103.45200000000001,"text":"DeepSeek’s actual potential is still unclear, and it has yet to achieve “artificial general intelligence”, the humanlike state that Meta and OpenAI are pursuing. "},{"start":112.007,"text":"But the rules might have changed. "},{"start":113.86200000000001,"text":"At the very least, DeepSeek may take some of the US giants’ customers. "},{"start":118.11700000000002,"text":"At worst, it has challenged the core belief that more hardware is the key to better AI. "},{"start":122.88400000000001,"text":"That principle has underpinned the market value of Silicon Valley companies as they invest hand over fist. "}],[{"start":129.23000000000002,"text":"What is bad for the hyperscalers could still be a windfall for everyone else. "},{"start":133.50900000000001,"text":"For most business users, having the absolute best model is less important than having one that’s reliable and good enough. "},{"start":139.73900000000003,"text":"Not every driver needs a Ferrari. "},{"start":141.85700000000003,"text":"Advances in reasoning such as R1 could be a big step for “agents” that deal with customers and perform tasks in the workplace. "},{"start":148.299,"text":"If those are available more cheaply, corporate profitability should rise. "}],[{"start":153.31,"text":"In that sense, this second China shock could resemble the first. "},{"start":157.202,"text":"It could bring not just destruction but a reshuffling — albeit a painful one for many. "},{"start":161.919,"text":"Researchers have estimated that for every job lost to the China shock, US households’ purchasing power rose by more than $400,000. "},{"start":169.637,"text":"The race for AI supremacy is on pause; the great giveaway has begun. "}],[{"start":173.97,"text":""}]],"url":"https://creatives.ftmailbox.cn/album/190441-1738029170.mp3"}