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DeepSeek Takes on Nvidia: How Low-Cost Chinese AI Works

from 2025 01 28 114527 a dramatic conceptual illustration depicting the tension between a massive tech company nvidia and a rising chinese ai startup deepseek the scene copy

Nvidia's stock market crashes (-17%) after the debut of DeepSeek's AI models, the Chinese startup that challenges the big guys with cheaper solutions. This is how the chip giant is trying to recover

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Le actions di Nvidia (NVDA) suffered a 17% drop on Monday, dragged down by DeepSeek's Advanced AI Models Debut, a Chinese startup which promises to revolutionize the sector with cheaper and more sustainable solutions.

The situation worsened after DeepSeek presented the reasoning models DeepSeek-R1, which, according to experts, equal the performance of OpenAI e Meta for a fraction of the cost and energy consumption.

This announcement prompted a global sell-off of technology stocks, with Nvidia at the forefront, forcing the CEO Jensen Huang to record a net decline of $18 billion in its personal assets.

DeepSeek: A New Paradigm in Artificial Intelligence

DeepSeek, Based in Hangzhou, has attracted worldwide attention due to its highly optimized approach. The model DeepSeek-V3, for example, was trained using just 2.050 Nvidia H800 GPU, a significantly lower quantity than the 16.000 H100s used by Meta for its model Llama 3 405B.

These numbers highlight a technological breakthrough that could threaten the Nvidia business model, currently based on large technology companies like OpenAI, Meta and Google, who purchase huge quantities of chip to develop their AI models.

An Nvidia spokesperson said: “DeepSeek represents an excellent advancement in artificial intelligence and demonstrates the potential of the Test Time Scaling. However, model inference still requires a significant amount of Nvidia GPU and high-performance networks»

US blocks chip exports to China

The rapid rise of DeepSeek has raised not only economic but also geopolitical questions. The United States have imposed restrictions on theNvidia chip export more advanced towards China, allowing the sale of only reduced versions, such as the H800. Despite these limitations, DeepSeek has managed to develop competitive models using only these less powerful chips, demonstrating that the restrictions are not hindering China's technological progress as expected.

According to industry analysts, the DeepSeek challenge could force Nvidia to review its market strategies, especially to protect its dominant position in a context of increasing global competition.

With the AI ​​market rapidly evolving, Nvidia now faces the dual pressures of technological innovation that could cripple its sales and geopolitical dynamics that further complicate the competitive landscape.