INDUSTRY news
DeepSeek Launch Causes Shockwaves on Wall St
that operates on less-advanced chips, proving that innovation can outmanoeuvre trade restrictions.”
creating a sense of competition hitherto unfelt by dominant American providers, who arguably could have been accused of complacency until now. The announcement sent US chip maker NVIDIA stocks tumbling by 17% overnight, wiping $600bn off the market value and which upends the assumption that banning exports of US-produced chips to China will hamper progress. Mr Trump characteristically dismissed concerns, calling the news “very much a positive development” for the industry, but accepted it was also a ‘wake-up call’ for existing AI providers. CEO of global financial advisory and asset management giant, deVere Group, Nigel Green, recognises the impact of DeepSeek on tariffs, telling Broadband Journal “The assumption that tariffs could contain China’s technological ambitions is being dismantled in real time. DeepSeek’s breakthrough is proof that innovation will always find a way forward, regardless of economic barriers.” He went on, “By restricting China’s access to high-end semiconductors, Washington sought to slow its progress in AI, but DeepSeek is a a cost-effective AI model
The announcement by China of its new AI breakthrough, DeepSeek has rattled markets and surprised the new administration in Washington, whose frenetic first month has, among other things, been characterised by a series of executive orders signed by Mr Trump, containing anything from renaming oceans to exiting the Paris Accord. With the recent political realignment of the world’s most powerful tech and media giants Meta, Amazon, the unwavering support of X and Elon Musk and a possible buy out of TikTok by Microsoft, the US government appears to have the world at its feet commercially, politically and technologically. However, on the same evening that President Trump announced plans to erect punitive tariffs against semi- conductor imports from Taiwan, as part of an ongoing strategy to protect US dominance with the intention of producing such products in the US, China has thrown the US a technological curveball that has sent commentators and industry experts reeling. DeepSeek uses considerably fewer chips in its system than other LLM models, with considerably less expensive chips,
Nigel has a point; such logic can be applied to anything from car
manufacturing to air fryers, from Amazon to Temu. If you build it, they will come, after all. Consensus that Wall Street has over-reacted is building; while a shock to a market so far dominated by the US, such competition could be healthy for the economy and innovation more generally. There are obvious restrictions to a story unfolding this quickly in a quarterly publication such as Broadband Journal, but at the time of writing there are a multitude of possible outcomes at this early stage; there are fears of a dot-com style bubble bursting as the market expands too quickly. Equally if this doesn’t happen the race for dominance could result in a price war between arch competitors HUAWEI and NVIDIA, in an already hostile trade environment, with potentially unappetising consequences globally. What is likely is market competition will lead to a drop in prices, leading to broader and faster adoption of AI, prompting a greater demand for chips locally.
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Volume 47 No.1 MARCH 2025
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