AI industry in turmoil

DeepSeek: How Chinese engineers are showing off the USA

By imposing export restrictions on high-tech goods, the USA wanted to keep China at arm's length when it came to AI research. But this has not worked.(Bild: photostockatinat - stock.adobe.com)

Normally, there is not much going on in China at the end of January: many businesses shut down for the Chinese New Year celebrations and millions travel to their families. But the Year of the Snake 2025 is starting differently: the start-up DeepSeek used the festive season to unveil a new artificial intelligence that is set to send shockwaves throughout the IT industry. Krone+ explains why China's AI has caught the previously undisputed leader, the USA, off guard.

In China, the snake stands for change and wisdom - attributes that US companies such as OpenAI, which is strongly supported by Microsoft, Google, Meta and Amazon also attribute to their AI agents. Last year, they pumped billions into the power-hungry, computationally intensive training of their AI algorithms. The expansion of computing capacities could not happen fast enough - the US dominance in this still young field was to be secured. The beneficiary was the chip company Nvidia, whose processors are well suited to AI training - and who could barely keep up with production. Driven by a few major customers and stock market euphoria, the share price exploded - only to plummet after the unveiling of DeepSeek AI. 600 billion US dollars were wiped out in a single day. What is making investors so nervous? Krone+ explains the background.