DeepSeek breakthrough and the AI power shift. Should we be concerned? - Part 2

Artificial Intelligence is at the heart of a new global technology race, with emerging players challenging the long-standing dominance of US tech giants. DeepSeek AI’s success with the DeepSeek-R1-Zero model has sparked industry-wide conversations about innovation, open-source collaboration, and the evolving geopolitical landscape of AI development.

In the second part of this feature, we have experts delving into the implications of DeepSeek’s breakthrough—exploring how strategic ingenuity, cost-effective AI training, and shifting economic dynamics are reshaping the global AI ecosystem. As DeepSeek proves that success in AI isn’t solely dependent on access to the most powerful hardware, the industry faces critical questions: Will US firms adapt to this changing paradigm? And how will AI-driven geopolitics shape the next wave of innovation?

Also read:

Enter the dragon! Will DeepSeek upend the US AI tech hegemony? Part - 1

A New Era of AI Competition

Of all the 1,328 AI large language models worldwide, 36% were developed in China, making the country the second-largest player in the AI landscape, trailing only the US, according to a white paper published last year by the China Academy of Information and Communications Technology.

And young Chinese researchers strongly embrace open-source culture due to its benefits, according to Tufts University professor Thomas Qitong Cao. Meanwhile, US export controls have forced Chinese AI firms to maximize efficiency with limited computing resources, leading to potential industry consolidation, notes Matt Sheehan of the Carnegie Endowment. This shift is already evident, with Alibaba Cloud recently partnering with Beijing-based startup 01.AI to merge research efforts. Cao further highlights that the evolving AI landscape necessitates agility and a natural division of labor among Chinese firms to stay competitive.

Yashtika Vaswani, Head Of Digital Marketing, Makani Creatives, observes that DeepSeek AI’s success proves that winning in AI isn’t just about having the most powerful chips—it’s about working smarter.

According to her, despite U.S. sanctions on advanced chips, DeepSeek has found ways to optimize its models and get big results. “Tech dominance isn’t about who has the biggest servers—it’s about who has the smartest strategies. This shakes up the belief that only U.S. giants like OpenAI and Google can lead the AI game,” she adds.

Yashtika Vaswani observes that China’s progress in AI isn’t just about technology—it’s about power and influence. “As companies like DeepSeek step up, we’re likely to see more global competition, tighter trade rules, and countries pushing to develop their own AI. AI is no longer just a tech race—it’s a geopolitical chess game. The next few years will show how this battle shapes the world,” Vaswani adds.

DeepSeek’s success is not just a testament to the power of their hardware but also to their strategic ingenuity in navigating the constraints of the global tech landscape, points out Apoorva Kumar, Cofounder and CEO Inspeq AI.

He observes that their ability to challenge US giants stems from a combination of software innovation, strategic adaptation to sanctions, and leveraging non-traditional resources. This success demonstrates that in the world of AI, it’s not just about having the biggest, most powerful chips (NVIDIA stocks went down by 17%), but also about being able to work smart within the available resources, he adds.

With DeepSeek claiming significantly lower training costs compared to US counterparts, experts believe this signals a shift in how AI innovation will be approached globally. Experts are unanimous in their view that US firms will have to rethink their strategy; it will henceforth be hard for them to sustain their large-scale investments in light of this competition.

Abhinav Jain, Co-Founder and CEO, Almonds Ai, is certain that DeepSeek’s approach is shaking things up in the global AI landscape.

According to Jain, developing the R1 model for under $5.6 million—compared to the $100 million to $1 billion spent by US companies—signals a major shift. This level of cost efficiency is drawing attention from businesses, researchers, and policymakers alike. For years, groundbreaking AI was thought to require massive budgets and top-tier hardware. DeepSeek is proving otherwise, demonstrating that innovation can thrive through efficient algorithms, open-source collaboration, and streamlined processes—all without exorbitant costs.

Jain believes that for US firms, this is a challenge as well as an opportunity. They’ll need to adapt by finding smarter ways to innovate, such as leaning more on open-source development, improving efficiency in their training methods, or even rethinking how they allocate resources. At the same time, he adds, there’s no denying that DeepSeek’s success raises a big question: can traditional heavy-spending approaches remain sustainable in this new era of cost-effective AI development?

Apoorva Kumar believes that DeepSeek's ability to deliver lower-cost, high-performance AI models might indeed signal a shift towards more efficient, globally distributed AI innovation.

He observes that US firms may face intense pressure to rethink their business models, moving away from raw hardware investment and toward more cost-effective, scalable, and sustainable approaches. This, according to him, could spur innovation in model optimization and collaborative efforts across borders, potentially democratizing access to advanced AI technologies. The larger question for US companies will be whether they can adapt quickly enough to this changing landscape or risk being left behind in a rapidly evolving, more competitive AI ecosystem.

This is also a great tailwind for start-ups which leverage foundation models to solve business problems as the unit costs of running AI goes down dramatically, he adds. 

According to Giridhar LV, Founder, Nuvepro Technologies, DeepSeek’s rise has been called a "wake-up call" for the U.S. tech industry by former President Donald Trump. While he acknowledges the challenge, he also sees an opportunity—lower-cost innovation could benefit the global market. However, countries like Australia have raised cybersecurity concerns, urging caution on data privacy and quality standards.

“China has proven resilient in overcoming US chip export restrictions, as seen in DeepSeek’s ability to achieve comparable results with fewer resources. By fostering collaboration and adopting innovative approaches, Chinese developers have shown that ingenuity can offset hardware constraints. This challenges US dominance in AI and signals a broader shift in global tech power. Industry leaders like OpenAI’s Sam Altman and Databricks’ Ion Stoica recognize DeepSeek’s impact, predicting that lower costs could drive AI adoption across industries,” says Giridhar.

According to him, DeepSeek’s rise is not just disrupting the market—it is reshaping AI development with a stronger focus on efficiency and innovation. “As the US reassesses its approach, the global AI landscape is becoming more competitive and diverse. Ultimately, DeepSeek’s success underscores a crucial reality: AI’s future will be defined by adaptability and innovation, not just financial resources.”

A big moment for the global tech industry

DeepSeek’s advancements underscore China’s expanding influence in the AI sector, potentially reshaping global geopolitics and economics. As companies like DeepSeek challenge US technological dominance, this shift could have far-reaching geopolitical consequences for international competition, trade, and innovation.

DeepSeek’s lower training costs show that innovation doesn’t always have to come with a massive price tag, says Yashtika Vaswani. “If AI can be developed more efficiently, it could open doors for newer players and force big tech companies to rethink how much they spend. The real AI race isn’t about who spends more—it’s about who innovates smarter. This shift could lead to more competition and better AI solutions worldwide,” she adds.

Abhinav Jain observes that this is a big moment for the global tech industry.

According to Jain, DeepSeek’s advancements are more than just a business success—they’re a signal that China is catching up, fast, in the AI race. What we’re seeing is a shift in the balance of power, and that’s going to have ripple effects on both a geopolitical and economic level, he says.

Geopolitically, Jain adds, this will likely intensify the already complex relationship between the US and China.

“The tech industry is at the heart of this rivalry, and DeepSeek’s success might push the US to rethink its strategy. Sanctions alone aren’t enough—they’ll need to double down on fostering innovation at home and creating an environment where their tech companies can thrive. Economically, this kind of competition could be a win for everyone in the long run. As more players enter the game, we’re likely to see AI solutions become more affordable and accessible. Businesses and consumers will benefit, and the AI ecosystem will become richer and more diverse,” he adds.

Abhinav Jain also feels that there’s also something deeply inspiring about the open-source aspect of DeepSeek’s work. “By making their advancements more transparent, they’re promoting accountability and encouraging others to build responsibly. If this becomes a trend, we could see a more collaborative, ethical, and inclusive approach to AI development worldwide,” he concludes.

Apoorva Kumar notes that the rise of Chinese AI companies like DeepSeek is driving a major shift in the global tech landscape.

“We are witnessing intensified geopolitical and economic competition, with AI at the center of global power dynamics. For the US, this challenges its technological dominance, while for China, it’s an opportunity to cement its leadership. As the AI race accelerates, we will see shifts in international alliances, technological standards, and economic structures. This rivalry will shape AI governance, global trade, and security, influencing everything from supply chains to social order. Both nations must navigate this carefully, balancing innovation with ethics, security, and global interests,” he concludes.