China’s DeepSeek miracle is not everything it seems

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China’s DeepSeek miracle is not everything it seems
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China’s Communist Party could hardly have wished for a more obliterating propaganda stunt to cut Trump’s strident new America down to size. But cracks are starting to appear in its story.

If we are to believe that China’s DeepSeek has matched Silicon Valley’s AI giants in breakneck time, on a shoestring and with a tiny fraction of the data and energy use, the world is indeed in convulsion.Donald Trump’s $US500 billion Stargate bid for supremacyThose who thought US trade restrictions limiting the export of Nvidia’s GPU chips would keep the US ahead of China were wrong.

On the face of it, the DeepSeek shock demolishes the commercial assumptions that underpin America’s hyperinflated tech bubble and has laid waste to digital darlings across the world, with collateral casualties to match. Uranium stocks fell 11 per cent on Monday since the vast expansion of data centres may not be needed, and nor will the nuclear plants to power them.

He said the US embargo on high-end chips had forced his team to rely on “inference”, a form of AI training that depends on recognising patterns in data. “We never intended to be a disruptor; it just happened by accident,” he said.

DeepSeek’s claims on cost stretch credulity. Mark Zuckerberg’s Meta is spending more than $US60 billion this year on AI. Its Llama 4 is expected to cost $US600 million and will require 160,000 advanced GPUs to train the model. Open AI is burning through $US5 billion a year on its closed-source ChatGPT architecture. OpenAI’s Sam Altman has been soliciting $US5 trillion. Yes, trillion.

Marc Andreessen, the éminence grise of Trump’s tech oligarchy, praised the company, calling the new R1 model the Sputnik moment for Silicon Valley. “One of the most amazing and impressive breakthroughs I’ve ever seen,” he said.

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