Shares in U.S. semiconductor giant Broadcom (AVGO) were lower today on reports that Chinese disruptor DeepSeek was set to launch an updated AI model.
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DeepSeek is Back
AVGO stock was down 2% in early trading as reports emerged and rumors spread on social media that DeepSeek, which rattled U.S. tech stocks earlier this year with its low-cost open-source technology, was back for another round.
According to a report in the South China Morning Post, DeepSeek-R2, the successor to those revolutionary R1 and V3 reasoning models, is set to be launched “imminently” and iT will set “new benchmarks for cost-efficiency and performance.” That is quite the statement given that DeepSeek’s original impact was based on the fact that its models were built at a fraction of the cost and computing power most tech firms typically need for their AI models.
It is also expected to have double the parameters of R1 which could mean more accurate decision-making and be more efficient and simpler to use for customers. One report suggested that R2 would be “the most cost-effective large language model” on the market.
Chinese AI Drive
In another potential blow for U.S. tech firms such as Nvidia (NVDA) and Advanced Micro Devices (AMD) there are reports that the R2 will be powered by Huawei Ascend 910B chips.
That is also significant given the intensifying race between the U.S. and China in AI development and also the current environment of trade tensions between the world’s two largest economies.
Nvidia recently, for example, faced curbs imposed by the U.S. government on the export of its H20 chips to China. It is concerned that China could use the H20 chips to build AI supercomputers.
However, there is little the U.S. can do if China and its tech firms become self-reliant in the chase for AI dominance.
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