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DeepSeek shows Silicon Valley’s huge blind spot on AI
OpenAI and others have coasted along believing money was their moat. It’s not.
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DeepSeek’s latest R1 model, released on Jan 20, was built with just US$6 million (S$8 million) in raw computing power and inferior AI chips.
PHOTO: BLOOMBERG
Parmy Olson
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In 2024, the chief executive of a leading artificial intelligence (AI) firm was asked at a private Silicon Valley dinner about how his company differentiated from others building “foundation models”, the systems underpinning chatbots like ChatGPT. Did he have a moat? Yes, he answered, according to another CEO who was there. No one else had raised the billions of dollars that he had. That was his moat.
This short-sighted approach to doing business, that huge sums of money alone can keep competition at bay, is why giants like Meta Platforms are in panic mode about DeepSeek, a Chinese company that has built a formidable AI model for roughly the salary of a single AI executive in the US. Its breakthroughs now pose a shift in the balance of power and a reckoning for tech giants, who are suddenly no longer the guaranteed winners of AI.
