Market Turmoil Following Emergence of Cheap Chinese AI Model

Media outlets reported the emergence of a cheap Chinese AI model as a competitor to Apple’s American 'ChatGPT'. This model is produced by a Chinese startup called 'DeepSeek', which began offering free AI services last week. The news led to a drop in the stock value of Nvidia, a giant in AI technology development, prompting shareholders to sell their stocks on Monday, February 8. Chinese AI producers claim that the new product consumes less data compared to ChatGPT and offers services at a much cheaper rate than its American counterpart. Donald Trump, the President of the United States, reacted to this issue on Monday evening in Florida, stating that 'DeepSeek' should serve as a wake-up call for our industries, and we need to focus closely on this competition. Trump recently announced that the private sector will invest up to $500 billion in AI infrastructure. This significant investment will occur in a new collaboration among AI companies OpenAI, Oracle, and SoftBank. This statement was made on the second working day of Trump's official four-year presidential term, which began on February 1, coinciding with the cancellation of Joe Biden's executive order on AI. The increasing demand for electricity and data centers is a concern, as AI technology requires immense processing power, leading to a rise in demand for advanced data centers. These centers allow tech companies to cluster thousands of chips together. Trump commented on this, saying, 'They need to produce a lot of electricity, and we will enable them to easily do that in their centers if they wish.' According to the North American Electric Reliability Corporation, the rising electricity consumption due to the expanding activities of AI data centers, along with electricity supply to buildings and transportation, will put about half of the United States at risk of electricity shortages in the next decade.