United States President Donald Trump said on Monday that Chinese startup DeepSeek’s artificial intelligence technology should be a wakeup call for American industries in his remarks to House Republicans in Miami, Florida.
“The release of DeepSeek, AI from a Chinese company should be a wakeup call for our industries that we need to be laser-focused on competing to win,” Trump said.
On Monday, DeepSeek took over rival OpenAI’s ChatGPT as the most downloaded free app in the U.S. on Apple’s App Store. The launch and increasing popularity of DeepSeek pushed investors to dump tech stocks globally.
Shares of Nvidia, a key player in the AI boom in recent years, dragged U.S. stocks lower, plummeting 17 percent on Monday and wiping $593 billion from the chipmaker’s market value, a record one-day loss for any company.
Lower AI training costs spur concerns
Despite the growing attention around R1, DeepSeek remains largely unknown. Based in Hangzhou, China, it was founded in July 2023 by Liang Wenfeng, a Zhejiang University graduate with a background in information and electronic engineering. It was incubated by High-Flyer, a hedge fund that Wenfeng founded in 2015.
The launch of DeepSeek’s latest AI model, which it says performs on par with OpenAI-o1, has caused concerns among leading American AI firms. The company gained attention after writing in a paper last month, revealing that the training of DeepSeek-V3 required less than $6 million worth of computing power from Nvidia H800 chips, raising doubts about the reasons behind some U.S. tech companies’ decisions to pledge billions of dollars in AI investment.
OpenAI’s CEO Sam Altman called it an “impressive model”. In a social media post, he added: “We will obviously deliver much better models and also it’s legit invigorating to have a new competitor!”
Meanwhile, Microsoft CEO Satya Nadella wrote on X that the DeepSeek launch was just an example of the Jevons paradox, stating: “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.”
In the U.S., Broadcom ended down 17.4 percent, while Microsoft fell 2.1 percent and Alphabet closed 4.2 percent lower. The Philadelphia semiconductor index also fell 9.2 percent, its largest drop since March 2020.
Trump says DeepSeek’s innovation is “positive”
“I’ve been reading about China and some of the companies in China, one in particular coming up with a faster method of AI and much less expensive method, and that’s good because you don’t have to spend as much money. I view that as a positive, as an asset,” Trump said.
Trump added that Chinese leaders told him the United States had the most brilliant scientists in the world, indicating that if Chinese companies could come up with cheaper AI technology, American companies would follow.
“We always have the ideas. We’re always first. So I would say that’s a positive that could be very much a positive development. So instead of spending billions and billions, you’ll spend less, and you’ll come up with, hopefully, the same solution,” Trump said.
The stock market fall yesterday came after Donald Trump announced last week a joint venture with OpenAI, Oracle and SoftBank to invest billions of dollars in American AI infrastructure. The project, Stargate, was unveiled at the White House by Trump, SoftBank CEO Masayoshi Son, Oracle co-founder Larry Ellison and OpenAI CEO Sam Altman.
Notable initial technology partners will include Microsoft, Nvidia and Oracle, as well as semiconductor company Arm. They said they would invest $100 billion to begin with and then increase the investment to $500 billion over the next four years.
