The launch of DeepSeek has spurred a spate of Chinese tech firms flooding the market with low-cost AI models, unsettling the already established Western rivals like OpenAI and Nvidia.
DeepSeek shook the market in January when it launched at a fraction of the price of other AI models, creating competition for the likes of ChatGPT by OpenAI, Google’s Gemini, and Claude by Anthropic.
Chinese companies roll out new products and updates since DeepSeek launch
Since the launch of the low-cost DeepSeek to immediate success, Chinese companies have started rolling out major upgrades for their models as well as new products as they seek to outdo their Western rivals in the industry.
According to Bloomberg, Chinese firms have in the past two weeks rolled out not less than 10 significant product updates or releases by big names in the tech industry.
This comes as the AI startup did not only shake Western AI businesses alone, but other big names in China that are now compelled to pace up and stay relevant in the AI race. For instance, search engine giant Baidu expanded its Ernie X1 in direct rivalry to with DeepSeek’s R1. Peers Alibaba also came up with its AI agents and reasoning models upgrade to stay ahead in the race.
Over the past week, Tencent Holdings also joined the bandwagon for new releases and hurriedly launched its AI blueprint and respond to R1.
Apart from new product launches or upgrades, Ant Group Co. had other ways of making a mark in the AI industry recently and shared its findings on how Chinese chips can cut costs by a fifth, while DeepSeek itself upgraded the V3 model.
According to Bloomberg, Meituan which is known as the world’s largest meal-delivery service, announced it was spending billions of dollars on AI. The rapid acceleration of enhancements is more than just Chinese firms jumping onto the DeepSeek bandwagon.
According to Bloomberg, nearly all of the AI models are open sourced and are a reflection of the developer’s effort to set worlds standards and benchmarks, and get a bigger share of the global AI market.
The market awaits to see the full impact of these new developments in the AI industry. While these may not yet surpass the most cutting-edge systems from Western developers, the Chinese newer versions are putting pressure on leading US companies.
“If you assume the Chinese LLM players’ intent is to disrupt the market and steal share, it’s worked,” said James Wilton, managing partners and founder of Monevate, a consultancy for tech companies.
“They might be willing to eat up the costs right now, but it won’t stay free forever.”
Wilton.
Alibaba chairman Joe Tsai on Tuesday warned of a potential bubble forming around the data center developments. He said that the pace of that build out was likely to outstrip the initial demand for AI services
“I’m still astounded by the type of numbers that’s being thrown around in the United States about investing into AI,” said Tsai.
“People are talking, literally talking, about $500 billion, several 100 billion dollars. I don’t think that’s entirely necessary,” he added, reinforcing the popular sentiments when DeepSeek launched claiming it developed its models at the fraction of costs that was used for developing rival models like ChatGPT.
The news sent markets crashing with investors weighing if the huge amounts of investments channelled for AI developments were worth it.
According to Bloomberg, Chinese cloud service providers hosting AI developments are currently reducing prices, in a tough competition that is threatening to spill beyond the Chinese borders.
In a post on X, Balaji Srinivasan a tech investor and former general partner with Andreesen Horowitz indicated there was nothing new with what China is doing.
“China is trying to do to AI what they always do: study, copy, optimize, and then bankrupt everyone with low prices and enormous scale.”
Srinivasan
He added the Asian nation has strengths in hardware. According to him, the cheaper and more accessible the AI models, the more the demand for devices powered by AI.
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