China-based DeepSeek artificial intelligence (AI) model has shaken the sector by offering high performance apparently at a fraction of the cost of those developed by US giants, with many experts saying the release also hints at opportunity for investment minnow Europe.
DeepSeek’s large language model (LLM) is “making a mockery of the (idea that) we need a trillion dollars to train the next level of AGI”, or artificial general intelligence, said Neil Lawrence, machine learning professor at Britain’s University of Cambridge.
He was referring to the US announcement last week of a pharaonic “Stargate” programme to build $500 billion worth of AI infrastructure, a plan led by ChatGPT creator OpenAI.
Largely destined to be pumped into data centres packed with the latest AI chips, the scale of the sums underscored that almost no European firm can access the resources to compete at the cutting edge.
But DeepSeek’s claim that it succeeded in producing a model with similar capabilities to OpenAI’s for just $5.6 million has upended those certainties.
The technology promised “models that are more efficient and less hungry for GPUs [graphic processing units], for energy and for cash,” Laurent Daudet, chief executive of French generative AI company LightOn, told AFP.
“It’s interesting for Europe to see that we don’t need a Stargate project to do something interesting… to innovate, you don’t need $500 billion,” he said.
The shock has battered AI-related tech stocks in recent days, including key chipmaker Nvidia.
“It shows that competition is very, very strong and that there’ll be a price war too,” said Nicolas Gaudemet, AI chief at the consulting firm Onepoint.
“An additional provider will bring prices down,” he predicted.
– Open source –
Cambridge professor Lawrence said it was a “tragedy” that DeepSeek had not emerged from Europe’s deep reserves of AI talent in both academia and business.
But he added that DeepSeek’s “small change in the recipe” was just “a glimpse of the innovation” ahead.
“It is very encouraging for Europe… there will be more than one DeepSeek,” he said.
Lawrence singled out for praise DeepSeek’s open-source methodology, under which the developers exposed the guts of their project to the wider AI community, which can then build further on it.
That was good news for European contenders such as France’s Mistral, Gaudemet said.
“They can reuse (DeepSeek’s models) to train up theirs and stay in the race,” he said, though “they’ll have to be very good, because the competition isn’t just between the US and Europe — China is showing that it’s capable”.
Jonas Andrulis, CEO of German AI firm Aleph Alpha, told AFP his company was already offering DeepSeek’s capabilities to clients.
But he added that he had long expected such models to “become a commodity”.
“We have to drive meaningful innovation beyond ‘Hey, those guys also did an LLM’,” Andrulis said.
– ‘Card to play’ –
Cheaper AI could mean more tools adapted for local markets and individual businesses rather than a massively resourced and centralised model.
“There is a future for more frugal models that can perform just as well, especially for business needs,” LightOn’s Daudet said.
He described his company’s role as building the “chassis” of a usable vehicle around the “motor” of an AI model — “how a business can use it in a totally secure, personalisable way, with all the guarantees they want”.
“There’s obviously a card to be played for (European) companies, which is security, the aspect of ‘your data will stay in Europe’ and be handled by people whose interests are… in Europe,” Onepoint’s Gaudemet said.
“A lot of countries in the world that are not the US or China feel a little bit uneasy to accept full-on dependencies to one of those two power blocs,” said Andrulis.
“This is a valid strategy to basically be the collaborative, fair, open third way that’s not trying to strong-arm you in one way or the other.”
Europe has “some of the strongest researchers in the world and bottom-up, we understand where those strengths are”, Lawrence said.
“We don’t need massive amounts of investment, but we do need people who are listening to people in their own countries and their own continent… not having their heads turned by whatever (OpenAI chief) Sam Altman’s latest narrative is,” he added.
‘Good news’: Dutch chip giant ASML welcomes DeepSeek
The head of Dutch giant ASML, which makes chip-making machines that power the tech industry, Wednesday welcomed the emergence of China’s low-cost AI firm DeepSeek and predicted others would disrupt the sector.
The arrival of DeepSeek and its AI chatbot developed at a fraction of the cost of Western competitors has upended the tech world and wiped billions off share prices.
But ASML CEO Christophe Fouquet said that DeepSeek addressed two problems faced by the AI industry — it was too expensive and too energy-hungry.
“If you ask me, for us, anyone that lowers cost is in fact good news for ASML,” Fouquet told reporters as he presented the firm’s 2024 results.
“Because lower cost means AI can be used in more applications. More applications means more chips. And we are in the business of providing equipment to people to make chips,” he said.
Given the potential size of the AI market, Fouquet said more upstarts would likely explode onto the scene in coming months.
Asked about DeepSeek as the “elephant in the room”, Fouquet quipped: “You should expect to see a few elephants in the room in the next few months or few years.”
“And I think the competition, especially when it comes to software… will be very high.”
– ‘Very bullish’ –
Fouquet hailed a “record year” for ASML in 2024 terms of sales, which came in at 28.3 billion euros ($29.5 billion).
Investors cheered a strong final quarter in terms of net bookings that were almost double market expectations at 7.1 billion euros.
Shares in ASML, which had suffered from a DeepSeek-inspired rout like the rest of the tech sector, rebounded strongly, up around 10 percent.
Despite a dip in after-tax profits to 7.6 billion euros, compared to 7.8 billion euros for 2023, Fouquet said the firm was “very bullish” for the future.
“If I summarize a bit the future, it’s bright… I think, if anything, AI has strengthened the opportunity for this business,” he said.
Nevertheless, he admitted that while some of ASML’s customers were seizing the opportunities presented by AI, others were lagging behind, making the outlook uneven.
“The opportunity that AI represents for the entire economy, for the entirety of humanity, is huge. And we are just at the beginning of that,” he said.
ASML left its annual sales forecast for 2025 of between 30-35 billion euros unchanged since its last guidance in October.
Longer-term sale guidance was also unchanged at between 44-60 billion euros for 2030 as ASML pins its hopes on AI
