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DeepSeek Shows China Playbook for Even Bigger US Shock on Chips

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The success of the new artificial intelligence model from Deepseek indicates how China can eventually achieve a larger technological penetration in the face of American export restrictions: the production of its advanced chips.

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(Bloomberg)-The success of the new artificial intelligence model from Deepseek indicates how China can eventually achieve a larger technological penetration in the face of American export restrictions: producing its advanced chips.

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While technology and political leaders admire the Dibsic’s ability to build a model of innovative artificial intelligence without spending nearly competitors in the United States, a development made by the markets on Monday, the question now is how Hangzhou fully withdrawn it- and what means American efforts to remain advanced On China in the technology race.

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Although many are still unclear, such as the accurate Deepseek chips that are used and whether they have enough to develop artificial intelligence models, their success highlights some of the main advantages of China. The country has a deep set of highly skilled software engineers, market support and a vast government in the form of subsidies as well as financing for research institutes. It also has an urgent need to find a way to do more with less resources.

“China has a clear advantage in the talent of information technology, both in terms of the huge number and the cost of employment,” said Liu Show, a research colleague at the National Institute of Strategy at the University of Tsinghua, which helps to lead Amnesty International. “The largest resource for China is the wide demand in the country – as one of the most populated countries in the world and a giant manufacturing center.”

In many ways, Dibsic is an example of China at its best. From Tencent Holdings Ltd. WeChat to Tiktok in Bytedance Ltd. , Chinese developers have formulated leading applications on the world for consumers, and the new pioneers of communication and e -commerce along the way. The R1 model of Deepseek has now been set to challenge similar products from Openai, Alphabet Inc. From Google and Meta Platforms Inc.

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However, China is still playing annex to the area of ​​devices – the main focus of US export controls in recent years. The United States prevented China from buying the most advanced artificial intelligence chips from Nvidia Corp. And Advanced Micro Devices Inc. The government of President Xi Jinping has prevented the ASML extreme printing machines (EUV) from ASML, which is necessary to produce high-production- end chips.

The eleventh billion dollars poured into progress in advanced semiconductors, part of its broader payment in China 2025 to make the nation a pioneer in emerging technologies. Research conducted by Bloomberg Economics and Bloomberg Intelligence shows that the wider effort was largely successful, prompting the ingenuity of manufacturing in China to historical highlands where the nation becomes dominant in the production of goods such as electric cars, batteries and solar panels.

Although Chinese companies such as Huawei Technologies Co. I made progress in the production of artificial intelligence chips, so far these parts are less powerful than those produced by NVIDIA. The lack of high -end chips, especially after the Biden Administration has tightened trade controls, a major obstacle to China’s development.

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In 2023, Huawei presented a smartphone with a 7 nm-chip-a matter that the United States believed it was not possible for Chinese companies to manufacture with lower chips. However, while this phone was welcomed as a breakthrough-and the payment of national aimals on social media with its release coincided with the visit of the then Minister of Commerce, Gina Raymondo to the country-since then, the company struggled to make progress towards 5 nm chips, while the competitors Like Apple has struggled, Samsung Electronics Co. To 3nm.

It is still not certain whether Deepseek, who has just issued its new model as Donald Trump was able to continue reaching the high -end chips that led to its current product. Liang Wenfeng, the company’s 40 -year -old company, cited controls as an obstacle to the company’s future growth.

On Monday, President Trump said the release of Deepseek R1 “should be an invitation to wake up to our industries that we need to focus on the laser to compete for victory.” He also praised the model as a “positive development” that can allow the progress of the lowest cost of artificial intelligence in all fields.

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While Deepseek provides positively for the Chinese economic transition away from the property towards the high growth drivers, it may motivate American lawmakers to redouble the efforts made to prevent the nation from obtaining the most advanced technology. The same concerns related to data security that prompted legislators to take action against Tiktok may also lead to a similar action against Deepseek.

Michelle Geoda, Executive Director at the Karash Institute for Diplomatic Technology in Bordeaux, told Bloomberg TV that it is necessary for the United States to maintain a “truly strong defense” with more strict export controls. She added that the United States at the same time, the United States needs to catch China to produce talented engineers if it will remain in the front of the technology race.

Engineers need

She said: “It is a changing games, meaning that all we should do is the weak American efforts to move faster and more intelligent, and perhaps more licensed in how to innovate us in artificial intelligence,” adding that China has graduated more than twice the number of engineers as the United States in 2020 . “Unless we have engineers to create and design databases, to design more than artificial intelligence, we will not be able to be a global capital of Amnesty International.”

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Currently, China is still behind several generations in the chip industry equipment. Beijing recently advised the state-related organizations using the new homemade stone print printing machine with a resolution of 65 Nm or better-far from the 8nm accuracy of the best ASML machines. However, China recently published the patent app from Shanghai Micro Electronics Group Co. , And known as Smee, for the EUV – which, if the market, will be the only one in the world to compete with those produced by ASML.

Other Chinese companies also make progress despite export controls in the United States. The Canada consulting company, Techinsights, said in new research that Chipmaker Changxin Memory Technologies Inc. Advanced manufacturing technologies that were not previously seen in the Chinese market showed, while Yangtze Memory Technologies Co. Also more competitive against industry leaders.

After Dibsic revealed, China showed that it has the ability to continue surprising the world with larger breakthroughs.

“It seems that a handful of 22 -year -old talented children without access to the best chips in the world, without reaching NVIDIA chips, has created something better than the best companies in the Western world,” Tony Heimb, the Australian government. Tuesday in Canberra.

“He explains to you how sabotage technology can be,” he added. “How can things happen quickly.”

– With the help of Yian Lee, Ben WestCott and Newley Purnell.

(Updates with a report on other Chinese technical developments)

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