Howard Lutnick, President Donald Trump's nominee for US Commerce Secretary, told senators on Wednesday that China's DeepSeek developed a powerful artificial intelligence model at minimal cost by stealing US technology and using advanced American semiconductors. He vowed to take steps to address the issue.

Speaking before the Senate Commerce, Science, and Transportation Committee, Lutnick emphasized that the US must take the lead in setting global AI standards. He argued that adopting a regulatory approach similar to the US cybersecurity framework would help maintain dominance in the field.

"We need to make sure we set standards that the world meets," Lutnick said. "And I think that's the way we'll keep our lead. Do it the American way, which we know is the winning way."

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Breakthrough AI Model

Last month, DeepSeek captured industry attention with the launch of a revolutionary AI model. The startup claims the model competes with those of major US companies, such as OpenAI, while being significantly more cost-effective due to its efficient use of Nvidia chips during training. Despite US trade restrictions limiting China's access to cutting-edge chips, DeepSeek used open-source technology and less-advanced hardware to develop its system, challenging the assumption that AI innovation requires top-tier infrastructure.

By Monday, DeepSeek's AI assistant had become the top free app on Apple's iPhone store, further solidifying its global rise. This achievement has sent ripples through the tech industry, sparking debates about competition between US and Chinese tech companies in the rapidly growing AI sector. Some US industry experts have raised concerns about DeepSeek's ability to achieve comparable results at a fraction of the cost, with investor Marc Andreessen describing the company's achievements as “one of the most amazing and impressive breakthroughs.”

Market Disruption

DeepSeek's rise has not only drawn attention to its technological advances but also triggered financial shockwaves. Shares of Nvidia, a key player in the AI hardware industry, dropped by 10% in premarket trading, and Nasdaq 100 futures fell by 3.4%. European tech companies also felt the impact, with ASML Holding NV experiencing an 11% decline. Analysts suggest that DeepSeek's cost-effective approach could fundamentally challenge the business model of high-capital AI infrastructure favored by Silicon Valley.

Founded in Hangzhou, China, in 2023, DeepSeek has rapidly established itself as a major player in the AI industry. Its innovative model and growing global influence highlight intensifying competition between China and the US in the race for AI dominance, forcing industry leaders to rethink their strategies.