This is a gigantic overreaction and the sky is not falling. Calm down, all of us.
The big takeaway is that DeepSeek did their work without the same number of Nvidia chips as the Americans, but we only have their word on that and I wouldn't believe China as it relates to whether water is wet. Color me wildly skeptical.
This speaks to efficiency, if correct and a different software thrust.
The Americans have massively superior compute, data, and scale whilst they now also have an inkling as to how the Chinese did their work. Much of the DeepSeek work is open source, but not all of it.
This gap will be quickly closed.
If the Americans adopt some or all of the Chinese approach and couple that with access to chips and compute, data, and scale then the outcome is predictable.
This may indeed be a Sputnik moment, but let's recall how that ended with America spurred to compete and untimately overcome any shortlived Russian advantage.
In many ways there is a different scale issue at work that is similar to nuclear weapons. Is there any real advantage of one adversary having a 250kt weapon when its enemy has a 150kt weapon?
No, it then becomes weapon reliability, the delivery system and market penetration. The US needs to have a coherent and war time footing policy on its chip manufacturing because this -- in the implementation phase -- becomes a war on chips.
Chips -- designing them, making them, obtaining them, using them -- is splitting the atom as it relates to nuclear weapons. The Chinese are wildly vulnerable as to interdicting the flow of chips in the world.
One of the reasons the Chinese have done this with a smaller base of chips is because they are not supposed to be able to access Nvidia chips. [The Chinese have another advantage -- total focus via a single company.]
The Holy Grail is AGI. Keep the main thing the main thing. The Americans should get to AGI before the rest of the world. Everyone will eventually get there.
Instead of regulating American AI, we should be spurring them on. Turn them loose.
This kick in the balls will be very good for American tech.
The immediate reaction from pros in the industry was that they had as many as 100,000 illicit Nvidia top of the line chips. Of course they could not say that because they were not supposed to have those chips.
On the other hand. The Chinese have a history of, let's say faking stuff. Their real estate markets, ghost cities, etc. Maybe this is true, maybe partly true. I'd like to see some more proof than just an announcement. Also I'd like to know why no one else tried it?
1) No corporate users in their right mind are going to give a Chinese data-mining company access to their corporate information.
2) At some point, AI software companies which scour the internet and records databases for information are going to start losing copyright cases in court. Many of them are just copying and pasting from copyright material, which is blatantly illegal, despite the label 'AI' which supposedly gives them a free pass to steal other people's intellectual property. Both Chinese companies and US companies (and all others) are a huge litigation risk.
3) Corporates have to give access to AI companies to search their own records for info. If we have a legitimate legal regime (sort of, in the USA) that is the only profitable market for AI software. I am not convinced that Chinese software makers would be welcome in US corporate markets.
The guy we shared Cubs season tickets with, has a business directory company. Not a peep out of him on the internet. He never publishes anything digitally, sticks with all paper, and a very cumbersome binding, and guards his intellectual property with aggressive litigation and security.
Of course, people are trying to steal his IP all day and all night. But that doesn't mean he has to let them. Just calling IP Theft "AI" doesn't make it legal.
I'm using Perplexity Pro which now has DeepSeek R1 model available. FWIW their CEO posted today on Linkedin that DeepSeek is "open source", and their model is hosted in US & Europe datacenters and does not send any data to China.
@Jeffrey, Oh Great Sensei... you speak wise truth. You nailed it, as usual.
We all forget the real value is in the software (AI Algorithms, code, etc), and that the Hardware is an enabler/facilitator. We have not optimized the most expensive costs in AI, the hardware/CPU COGS, due to our complacency. This is a good thing like the leapfrogs in networking. We started with 300 bits per second (300BPS) and 1200BPS and now communicating at Gigabits heading to Terabits. The technology hurdles being conquered enables all sorts of new software to do amazing things from HDTV to Big Data on your phone. Accelerate and Innovate. Lets wake up USA. From a fellow bootstrapper. David
How close do we get to another Andreessen tweet from a few days ago:
"A world in which human wages crash from AI -- logically, necessarily -- is a world in which productivity growth goes through the roof, and prices for goods and services crash to near zero. Consumer cornucopia. Everything you need and want for pennies."
(Note he went on to discount/qualify this entry in subsequent tweets.)
US education stinks for sure. A big part is an agency problem. Most parents who want education choice already have it. Kids who can benefit from a better system don't have much of a voice. This is where AI really does seem to have big potential. See new results from Africa.
Parents who want educational choice _and can afford to shell out tens of thousands of dollars per year per kid_ already have it. Most people don't.
You can run the DeepSeek software on your own computer, sure - but it only works if it can communicate with the tens of thousands of computers in China that run the trained neural nets. Your data is going to China either way.
One big reason many people live in a particular location is for schools, so they've made a choice. In any case, most people like their schools. Even people who live in Chicago like their schools, whether they should or not. Chicago has some good public schools and the families that are most driven find them. But I agree - not all high potential students do, as I said, there is a principal-agent problem. A big potential add for AI.
And running DeepSeek locally does not transmit data to China.
Greatly value your analysis, Jeff. My education continues; and I agree with being competitive rather than roadblocking competition through government payoffs.
Good article but let's keep in mind that the same day they released it they were hit by a Cyber attack and within 24 hours the US Navy has banned its use for security reasons, and yes, it really is for security reasons, not anti-competition.
https://x.com/morganb/status/1883686162709295541 good thread on this.....
Good read. Nice post, Jeff. Really rocking are you.
Bravo and well played.
JLM
www.themusingsofthebigredcar.com
This is a gigantic overreaction and the sky is not falling. Calm down, all of us.
The big takeaway is that DeepSeek did their work without the same number of Nvidia chips as the Americans, but we only have their word on that and I wouldn't believe China as it relates to whether water is wet. Color me wildly skeptical.
This speaks to efficiency, if correct and a different software thrust.
The Americans have massively superior compute, data, and scale whilst they now also have an inkling as to how the Chinese did their work. Much of the DeepSeek work is open source, but not all of it.
This gap will be quickly closed.
If the Americans adopt some or all of the Chinese approach and couple that with access to chips and compute, data, and scale then the outcome is predictable.
This may indeed be a Sputnik moment, but let's recall how that ended with America spurred to compete and untimately overcome any shortlived Russian advantage.
In many ways there is a different scale issue at work that is similar to nuclear weapons. Is there any real advantage of one adversary having a 250kt weapon when its enemy has a 150kt weapon?
No, it then becomes weapon reliability, the delivery system and market penetration. The US needs to have a coherent and war time footing policy on its chip manufacturing because this -- in the implementation phase -- becomes a war on chips.
Chips -- designing them, making them, obtaining them, using them -- is splitting the atom as it relates to nuclear weapons. The Chinese are wildly vulnerable as to interdicting the flow of chips in the world.
One of the reasons the Chinese have done this with a smaller base of chips is because they are not supposed to be able to access Nvidia chips. [The Chinese have another advantage -- total focus via a single company.]
The Holy Grail is AGI. Keep the main thing the main thing. The Americans should get to AGI before the rest of the world. Everyone will eventually get there.
Instead of regulating American AI, we should be spurring them on. Turn them loose.
This kick in the balls will be very good for American tech.
JLM
www.themusingsofthebigredcar.com
Expert word on the street is that they did indeed use many thousands of illicitly-obtained nVidia chips, and far more labor than reported.
The immediate reaction from pros in the industry was that they had as many as 100,000 illicit Nvidia top of the line chips. Of course they could not say that because they were not supposed to have those chips.
https://chat.deepseek.com/
I have been using it a bit. Seems very good.
JLM
www.themusingsofthebigredcar.com
On the other hand. The Chinese have a history of, let's say faking stuff. Their real estate markets, ghost cities, etc. Maybe this is true, maybe partly true. I'd like to see some more proof than just an announcement. Also I'd like to know why no one else tried it?
I've watched US Government sanctions fail time and again in my lifetime.
1) No corporate users in their right mind are going to give a Chinese data-mining company access to their corporate information.
2) At some point, AI software companies which scour the internet and records databases for information are going to start losing copyright cases in court. Many of them are just copying and pasting from copyright material, which is blatantly illegal, despite the label 'AI' which supposedly gives them a free pass to steal other people's intellectual property. Both Chinese companies and US companies (and all others) are a huge litigation risk.
3) Corporates have to give access to AI companies to search their own records for info. If we have a legitimate legal regime (sort of, in the USA) that is the only profitable market for AI software. I am not convinced that Chinese software makers would be welcome in US corporate markets.
good point
The guy we shared Cubs season tickets with, has a business directory company. Not a peep out of him on the internet. He never publishes anything digitally, sticks with all paper, and a very cumbersome binding, and guards his intellectual property with aggressive litigation and security.
Of course, people are trying to steal his IP all day and all night. But that doesn't mean he has to let them. Just calling IP Theft "AI" doesn't make it legal.
I'm using Perplexity Pro which now has DeepSeek R1 model available. FWIW their CEO posted today on Linkedin that DeepSeek is "open source", and their model is hosted in US & Europe datacenters and does not send any data to China.
@Jeffrey, Oh Great Sensei... you speak wise truth. You nailed it, as usual.
We all forget the real value is in the software (AI Algorithms, code, etc), and that the Hardware is an enabler/facilitator. We have not optimized the most expensive costs in AI, the hardware/CPU COGS, due to our complacency. This is a good thing like the leapfrogs in networking. We started with 300 bits per second (300BPS) and 1200BPS and now communicating at Gigabits heading to Terabits. The technology hurdles being conquered enables all sorts of new software to do amazing things from HDTV to Big Data on your phone. Accelerate and Innovate. Lets wake up USA. From a fellow bootstrapper. David
Creative destruction is great!
How close do we get to another Andreessen tweet from a few days ago:
"A world in which human wages crash from AI -- logically, necessarily -- is a world in which productivity growth goes through the roof, and prices for goods and services crash to near zero. Consumer cornucopia. Everything you need and want for pennies."
(Note he went on to discount/qualify this entry in subsequent tweets.)
some human wages will crash....other opportunities will open. that's why school choice is necessary. our educational system stinks in the US
US education stinks for sure. A big part is an agency problem. Most parents who want education choice already have it. Kids who can benefit from a better system don't have much of a voice. This is where AI really does seem to have big potential. See new results from Africa.
https://x.com/emollick/status/1879633485004165375
And you can run the DeepSeek software on your own computer if you have a reasonable workstation type computer. No need to send info to China
Parents who want educational choice _and can afford to shell out tens of thousands of dollars per year per kid_ already have it. Most people don't.
You can run the DeepSeek software on your own computer, sure - but it only works if it can communicate with the tens of thousands of computers in China that run the trained neural nets. Your data is going to China either way.
One big reason many people live in a particular location is for schools, so they've made a choice. In any case, most people like their schools. Even people who live in Chicago like their schools, whether they should or not. Chicago has some good public schools and the families that are most driven find them. But I agree - not all high potential students do, as I said, there is a principal-agent problem. A big potential add for AI.
And running DeepSeek locally does not transmit data to China.
https://venturebeat.com/ai/is-deepseek-really-sending-data-to-china-lets-decode/
Greatly value your analysis, Jeff. My education continues; and I agree with being competitive rather than roadblocking competition through government payoffs.
Good article but let's keep in mind that the same day they released it they were hit by a Cyber attack and within 24 hours the US Navy has banned its use for security reasons, and yes, it really is for security reasons, not anti-competition.