'AI's Sputnik moment': China-based DeepSeek's open-source models may be a real threat to the dominance of OpenAI, Meta, and Nvidia

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US-based companies have been at the forefront of the AI revolution, but now it looks like a new challenger has emerged. China-based DeepSeek is just over a year old, but the startup has released an open-source AI model called R1 that seems to have the rest of the industry worried.

DeepSeek was founded in 2023 by Liang Wenfeng, the co-founder of High Flyer, an AI-driven hedge-fund (via Bloomberg). Despite being a mere fledgling in the AI world compared to some of the bigger names like OpenAI and Meta, the DeepSeek V3 family of AI models appear to be much more efficient than competitors' efforts like ChatGPT.

The Register has performed some early testing on R1 in comparison to OpenAI's o1, a similar "Chain of Thought" (CoT) model, and found that its capabilities seem remarkably similar—with the former even beating out the OpenAI model in the MATH-500 test.

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The elephant in the room, however, is trade sanctions. The US government has banned the export of high-end AI hardware to China, which some have speculated has led to a more efficient approach resulting in DeepSeek's new models. If so, that would suggest that the sanctions haven't had the effect that the US gov may have hoped.

However, being a Chinese product (and given that many of the leading AI companies are US-based), it seems possible that restrictions may follow on its use for US companies, and potentially even those using US equipment, in the same fashion as the current trade sanctions.

Either way, the release of DeepSeek-R1 appears to have caused a significant rumble in the AI markets. Whatever happens next, it seems that the US may no longer hold all the keys to advanced AI—and the world awaits it's response.

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Andy built his first gaming PC at the tender age of 12, when IDE cables were a thing and high resolution wasn't—and he hasn't stopped since. Now working as a hardware writer for PC Gamer, Andy spends his time jumping around the world attending product launches and trade shows, all the while reviewing every bit of PC gaming hardware he can get his hands on. You name it, if it's interesting hardware he'll write words about it, with opinions and everything.