The big story today is the arrival of Chinese AI business DeepSeek. A week after US tech leaders announced a $500 billion investment in AI infrastructure, the previously obscure Chinese business claimed to have trained its AI model for $6 million. Most retail banks are starting to use some sort of AI so this will be of interest to many. Global stock markets fell this morning as doubts set in that US tech companies can maintain their leadership by sheer investment power alone. "Dylan Patel, chief analyst at chip consultancy SemiAnalysis, said cutting the cost of training and running AI models would over the longer term make it easier and cheaper for businesses and consumers to adopt AI applications," reports the FT. "'Advancements in training and inference efficiency enable further scaling and proliferation of AI,' said Patel. 'This phenomenon has occurred in the semiconductor industry for decades, where Moore's Law drove a halving of cost every two years while the industry kept growing and adding more capabilities to chips'." Successive US administrations have sought to impose restrictions on Chinese imports of advanced chips for training AI models. "It seems as if there is a bit of reality dawning that China has not been sitting idle, even as these tariffs and investment restrictions on tech companies have been put in place," said Mitul Kotecha, Asia head of emerging markets macro and foreign exchange strategy at Barclays.Marc Andreessen hailed it as 'AI's sputnik moment'. It seems that DeepSeek has been able to get its models to reason step-by-step "without relying on massive supervised datasets", writes Jeffrey Emanuel. Instead of using complex neural reward models, DeepSeek developed a rule-based system, a simpler approach that "turned out to be more robust and scalable than the process-based rewards models that others have tried". DeepSeek founder Liang Wenfeng, a hedge fund manager
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