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Last Monday, a small, low-profile Chinese AI lab called DeepSeek unveiled a set of artificial intelligence models so efficient they make Silicon Valley’s best look outdated.
These models are fifty times more efficient than even top U.S. offerings. The announcement has thrown American tech giants like OpenAI, Google, and Meta into a full-blown crisis, as their closed-door strategies suddenly stop cutting it. Now everyone on X is mocking them.
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American tech giants, caught off guard, are now scrambling to respond. OpenAI, the company behind ChatGPT, announced a $100 billion joint venture with Japan’s SoftBank, dubbed Stargate, aimed at building new AI infrastructure in the U.S.
Meanwhile, Elon Musk’s xAI is expanding its Colossus supercomputer, planning to deploy over one million GPUs to train its Grok AI models. Google, Meta, and Anthropic are also throwing billions into upgrading their computing clusters with Nvidia’s next-generation Blackwell chips.
But the U.S. companies have one major disadvantage: secrecy. For years, Silicon Valley has operated on a closed-door model, keeping AI breakthroughs locked behind proprietary systems. DeepSeek’s decision to make R1 open source has flipped that narrative.
This has triggered a wave of panic in the U.S., where companies now face pressure to decide whether to follow DeepSeek’s lead. But there are also concerns about whether DeepSeek can maintain its momentum. Despite its success, the company’s resources are admittedly limited compared to U.S. giants.
“They’ve built one of the largest computing clusters in China,” said a source familiar with the company. “But compared to what OpenAI and Google are building, it’s not enough. They’ll need to scale up if they want to keep up.”