What to Know About DeepSeek, the Chinese AI Model

A Chinese artificial intelligence model known as DeepSeek caused a shake-up on Wall Street Monday. The AI model has raised concerns over China’s ability to manufacture cutting-edge artificial intelligence.  

Daniel Cochrane, a senior research associate for the Tech Policy Center at The Heritage Foundation, joined The Daily Signal’s “Top News in 10” podcast to explain what DeepSeek is and whether it should be seen as a threat to the U.S.  

Listen to Cochrane’s comments on the podcast below or read the lightly edited transcript. 

Virginia Allen: What exactly is DeepSeek? What do we know about it? 

Daniel Cochrane: So, DeepSeek is what’s called a large language model, and large language models are essentially AI that uses machine learning to analyze and produce a humanlike text. So, if you think about, in the American context, we have LLMs like Gemini, like Meta’s Llama, like the most famous example, OpenAI’s ChatGPT. DeepSeek is essentially a Chinese LLM, and it is now considered one of the most powerful models, on par with ChatGPT, and that’s, of course, one of the reasons it’s generated the headlines it has. 

Allen: OK, so it’s not necessarily surprising that China would come up with a very powerful AI model. Why is it seen, though, as a threat? 

Cochrane: There’s a couple of reasons. The first is that, No. 1, it was thought that China was behind us in the AI race, and now they’re able to all of the sudden show up with this model, probably that’s been in development for many months, but just under wraps, but it’s on par with American models.

But the bigger reason, and a lot of people are claiming that this model was developed, or the company claims it was developed, with only about $5 million, which, of course, compared to the billions and billions that U.S. companies are spending, that seems pretty crazy. 

Now, I think that’s probably not actually the case. I think what’s probably going on there is the Chinese government has heavily subsidized and they’ve provided a lot of the infrastructure behind the scenes. But now the fact is it’s been done under the cover of darkness, so this hasn’t really been on the market. Now the markets are catching up, and they’re seeing, wow, China can compete, which is something we here at The Heritage Foundation have warned about for years, and so it’s something that the U.S. companies are having to reckon with. And this is a national security concern, as well as an economic one. 

Allen: Given those security concerns, is that why we saw so many tech stocks take a nosedive Monday? 

Cochrane: Well, so, it’s interesting. I think that the nosedive in the tech stocks is actually a false flag. The short-term way to interpret this event is, oh, China’s ahead, we’re getting crushed, so pull out of, say, Nvidia. Nvidia was one of the largest losers. And Nvidia, again, they manufacture the chips that are essential for these LLMs. But I actually think that’s a very short-term and wrong perspective because the reality is that in order to catch up with China, what’s going to have to happen is even more capital investment in [research and development]. 

And perhaps one of the biggest lessons that we should take away from this is that while American companies have been really prioritizing shareholders, so short-term shareholder profits, the Chinese have been prioritizing making fundamental strides in the technology itself, and now that’s showing up.

Again, they’ve been doing that behind the scenes, but now it’s on display, and we’re seeing what that could mean both for commercial applications initially but also long term, we’re going to see this in other applications as well.

So, the stock market, I think the immediate reaction is actually what the Chinese want, which is less American companies investing in the hard infrastructure and R&D necessary to stay ahead of them. And that’s really, I think, what we should take away from this. 

Allen: What will you be watching in the coming days and weeks? 

Cochrane: I’m going to be watching to see whether the stock market adjusts, that it reflects the reality that China’s trying to trip us up, whether the investors get smart to this and say, “Look, we’re not going to just have this knee-jerk reaction. We’re going to take a longer-term approach to investing in underlying technology to make sure we stay ahead of China.” 

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