January 28, 2025 Is Everything Going Deep?

Jittery markets? Just what exactly is Deepseek?

By David Soyka, Senior Editor at Industry Today

On Monday, Nvidia lost more market share value (almost $600 billion) than any company in history and the overall stock market, including manufacturing stocks, took a hit as well thanks to the release of a new open-source AI model called R1 from Chinese startup DeepSeek. What has DeepSeek got that other tech companies don’t?

It mimics human reasoning, the holy grail of AI research. Moreover, as Bloomberg reports, DeepSeek rivals or outperforms leading U.S. developers on a range of industry benchmarks (such as mathematical performance and general knowledge capabilities) but, and more importantly, built at a fraction of the cost.

Which explains why DeepSeek is at the top of Apple Store’s downloads as well as climbing up rankings on Chatbot Arena, the leaderboard for AI systems.

At the moment there is some uncertainty exactly how, and if, DeepSeek was able to achieve this.  One explanation is that the Chinese company took advantage of loopholes in American regulations that allowed it to obtain advanced chips and applied clever programming shortcuts. Developing AI requires expensive computer chips, which until now were thought out of reach to Chinese companies.

However DeepSeek was developed, which tech companies are still trying to determine, and what threats that may pose to U.S. security and export controls, what does DeepSeek mean for manufacturing companies?

Steve Banker writing in Forbes cites some positive implications for manufacturers:

• Industry is already incorporating AI into their enterprise systems to become more efficient. They need to pay AI vendors, such as Open AI, for the technology. If DeepSeek truly is less expensive, that means these systems become less expensive to acquire and operate.
• AI-based prompts consume 10 to 100 times more electricity at data centers than other internet search queries. This surge in electricity cost is expected to lead to a 70% hike in energy bills for small businesses by 2029. A more efficient AI technology can help reduce those costs to businesses, which could conceivably be passed on to consumers.

On the downside, the Trump administration may resort to tariffs on Chinese imports in retaliation for DeepSeek’s seeming ability to sidestep export controls on U.S. chips. Most economists expect tariffs used in an outright trade war to result in higher costs for manufacturers, leading to higher costs for consumers.

Expect Industry Today to watch and report further developments regarding DeepSeek as well as AI technology in general.

As science fiction writer William Gibson remarked, “The future is already here.”

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