The New Yorker:

The Chinese company’s low-cost, high-performance A.I. model has shocked Silicon Valley, and a longtime China watcher warns that the West is being leapfrogged in many other industries, too.

By John Cassidy

Last week, shortly before the start of the Chinese New Year, when much of China shuts down for seven days, the state media saluted DeepSeek, a tech startup whose release of a new low-cost, high-performance artificial-intelligence model, known as R1, prompted a big sell-off in tech stocks on Wall Street. China Central Television showed footage of DeepSeek’s bespectacled founder, Liang Wenfeng, meeting with Premier Li Qiang, the second-highest-ranking official in the Chinese government. A few days earlier, China Daily, an English-language news site run by the Chinese Communist Party, had hailed DeepSeek’s success, which defied U.S. restrictions on the export of high-performance semiconductor chips used to train A.I. models, as “not an isolated phenomenon, but rather a reflection of the broader vibrancy of China’s AI ecosystem.” As if to reinforce the point, on Wednesday, the first day of the Year of the Snake, Alibaba, the Chinese tech giant, released its own new A.I. model, which the company claimed “outperforms” competing products from U.S. companies like OpenAI and Meta “almost across the board.”

Alibaba’s claims haven’t been independently verified yet, but the DeepSeek-inspired stock sell-off provoked a great deal of commentary about how the company achieved its breakthrough, the durability of U.S. leadership in A.I., and the wisdom of trying to slow down China’s tech industry by restricting high-tech exports—a policy that both the first Trump Administration and the Biden Administration followed. Speaking at the World Economic Forum, in Davos, Satya Nadella, Microsoft’s chief executive, described R1 as “super impressive,” adding, “We should take the developments out of China very, very seriously.” Elsewhere, the reaction from Silicon Valley was less effusive. OpenAI said it was “reviewing indications that DeepSeek may have inappropriately distilled our models.”

Go to link