Is DeepSeek America’s Sputnik Moment?

January 27, 2025 TruthUSA

Commentary

The tech world and the U.S.–China competition were shocked when a relatively unknown Chinese tech company recently released an open-source model that quickly surpassed larger American competitors both in quality and resource efficiency.

This result shocked many and brought about what some refer to as America’s Sputnik moment: the realization that China presents a formidable competitor. However, before giving in to the hype, let us break down and understand what has explicitly taken place.

At this point in history, most people are aware of artificial intelligence (AI) models or companies like OpenAI’s ubiquitous product ChatGPT, Microsoft’s CoPilot, or Google’s Gemini. Even if you do not use those specific products, you may use them in an unknown way through other companies using their fundamental models. Creating and “training” these models takes enormous intellectual energy and, more fundamentally, computational energy.

At their heart, these computational models are nothing more than enormous statistical models. They are not actually intelligent but statistical models that determine what should be the next letter or word in a sequence and what the answer you are seeking to your question.

Let me give you a simple example. If I give you the sentence, “My dog is sick, and I am going to take him to get medicine at the … office,” you could probably infer, based on context, the missing word in the sequence. These statistical models are trained on massive amounts of text using layered statistical models to infer that the missing word is “veterinarian.”

The statistical models being used are enormous and require vast resources. The computational and electrical needs are so intensive that the U.S. government estimates that by 2030, less than five years away,10 to 15 percent of U.S. electricity demand could go to data centers running AI models. It is estimated that OpenAI, the owner of ChatGPT, spent more than $100 million just to train its model.

The key output breakthrough made by the Chinese company DeepSeek is to create a cutting-edge model that outperforms models like ChatGPT but does it at a fraction of the price. According to DeepSeek, it trained this model for $5 million to $6 million rather than the $100 million required to train ChatGPT. It must be emphasized that this emphasis on increasing efficiency was an industry-wide focus and not unique to DeepSeek or Chinese firms. However, how DeepSeek accomplished this, and even where DeepSeek came from, is where things start to get interesting.

Technically, DeepSeek’s approach to increasing efficiency is neither new nor entirely new. It is novel that it combined multiple techniques that other firms and researchers had used to improve efficiency into one model. Each of the separate techniques increased efficiency, but DeepSeek combined all of the well-known, established techniques into one model.

The individual techniques, however, are well known. For instance, one technique called quantization merely takes a number in the statistical model that may have 32 decimal places and reduces that to, say, four to eight decimal places.

Another technique is called the mixture of experts model. Think of this like sections of a library or gears on a car. When a user asks a question about an AI model, rather than using the entire model, it can send some questions to a specific expert and develop multiple smaller models to answer specific questions that also work as part of the larger model as a whole when needed.

All of the techniques mentioned here and others that DeepSeek used were well-established techniques to increase efficiency in modeling but had never been done before as one model.

Where the story about DeepSeek heads sideways is the pitched public relations campaign it waged. The company initially said it trained its foundational model on limited resources but simultaneously said it had access to 50,000 of the most advanced processors in the world. It claimed it only spent $5 million for the training but had access to nearly $2 billion, which would, in total, cost $4 billion with related other costs. The company’s own story did not add up.

DeepSeek’s story became even more confusing when it talked about this just being a side hustle. Given the political nature of accessing a limited number of state-of-the-art processors in China, which are officially blocked for export to China, it seems unlikely an unknown start-up is gaining priority over established tech stalwarts like Alibaba, Tencent, and Baidu without significant influence. This was clearly not a side hustle, and coming from one of the larger hedge funds in China with 200 employees, it seems likely to have significant backing and influence, though the exact source has yet to be determined.

There are multiple lessons to be drawn from what is known right now.

First, the technological breakthrough is, yes, an important output breakthrough by assembling all the other techniques together, but fundamentally, there was no novel technique breakthrough in work.

Second, the entire AI industry is rapidly evolving, and what is cutting-edge today can easily be geriatric and outdated in a month or two. Only within the past year did Chinese leader Xi Jinping openly worry about China lagging behind American AI companies. However, Chinese prowess in artificial intelligence and related sectors that link so closely and are so well funded by the Chinese Communist Party security apparatus should pose a long-term worry.

Third, while President Donald Trump issued an executive order to try to find a buyer for TikTok, DeepSeek would seem to fall under the same law. Given that DeepSeek says it sends the data to China and conducts a wide variety of activities, such as logging keystrokes, the data collection activities of all Chinese firms with electronics should be an increasing concern to the Trump administration.

Fourth, despite all the information provided, this has still served as a type of Sputnik moment for many Americans as they begin to realize the formidable opponent in the authoritarian state of the Chinese Communist Party. The Trump administration would be well served not just by criticizing China but also by establishing policies and incentivizing the most competitive and innovative firms in the world to confront China’s challenge and develop American-led and controlled technology.

Hopefully, this will be the Sputnik moment where we chart a new direction about the challenges facing us in a serious competitor and how we need to rise to that challenge to protect American liberty and leadership.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.

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