Trump Calls Release of Chinese AI a Wake-Up Call for American Companies

The release of a Chinese-made AI tool has caused serious turmoil in the stock market of technology giants; meanwhile, the President of the United States praised the affordability of this Chinese tool, stating that the release of DeepSik should be a wake-up call for American companies. Donald Trump said on Monday evening that the Chinese company has provided this AI assistant in a much faster and cheaper way, and 'this is good; if it is true, I see it positively.' Speaking among Republican members of the House of Representatives, Trump described the low production cost of DeepSik as a positive phenomenon and an investment, 'if it is true, no one really knows.' He added that the release of DeepSik by a Chinese company 'should be a warning for our industries, and we must have a laser focus on competition for victory.' The newly established Chinese company DeepSik released a free version of its AI application and assistant last week, claiming it was produced at a cost of about $5.6 million. Previously, the production costs of AI assistants offered by American tech giants had been reported between $100 million and $1 billion. However, some experts, including Stacey Rasgon, an analyst at the renowned Bernstein research institute, called the figure announced by the Chinese company 'very misleading.' The release of the free AI assistant by DeepSik and the company's claim about its production cost led to turmoil in global stock markets and a drop in the shares of several AI technology giants. The US stock market, NASDAQ, fell about 3.5% on Monday, marking its third worst day in two years. Nvidia, a chip giant, saw its stock drop about 17%, breaking the record for the largest one-day stock value loss on Wall Street with a loss of $600 billion. Broadcom, a chip manufacturer, also lost about 18% of its stock value. Microsoft, the main supporter of ChatGPT, experienced a 2.5% drop, while Alphabet, Google's parent company, saw a decline of over 4% in the stock market. Companies related to data centers also faced significant declines, with Digital Realty losing nearly 9% of its value on the stock exchange. The turmoil in the stock markets began in Asian exchanges, where the stock value of Japan's SoftBank Group fell by 8.3%; subsequently, the turmoil spread to European stock markets and then to the United States. The decline in the stock value of these tech giants occurred while their stock prices had recently risen after Donald Trump announced a $500 billion investment in US AI infrastructure. This development comes about two weeks after the Biden administration imposed further restrictions on the export of advanced AI chips to China and other competitors to make access to advanced technologies more difficult. What do we know about DeepSik? The startup DeepSik was founded in China in 2023, and its founder is a 40-year-old engineer named Liang Wenfeng. The free versions of the company's two AI tools, named 'R-1' and 'E-3,' were recently made available for download in the United States, and a large number of users downloaded them. According to data from Chatbot Arena, a website operated by the University of Berkeley, these two Chinese AI tools are currently among the top ten most downloaded applications in the US. DeepSik also claims that its AI performs as well as its well-known competitors in mathematics, general knowledge, and question-answering, and in some cases, even better. DeepSik asserts that it uses cheaper chips and less data in producing its AI tools. In recent years, as concerns in the US about China's rapid advancements in high-tech fields have increased, Washington has severely restricted the export of the most advanced chips to China that could be used in AI technology. The boom in the AI industry over the past 18 months has attracted significant amounts of investment to related companies, dramatically increasing their stock values.