Here's your Forbes Daily Briefing for Wednesday, January 29th. Today on Forbes, the Chinese AI company,

Trump says, is a wake-up call for Silicon Valley. A Chinese company called Deepseek, which recently

open-sourced a large language model, it claims performs as well as OpenAI's most capable AI systems,

is now the white-hot center of attention for the AI community.

Its tech is being lauded as one of the best open-source challengers to top American AI models,

stoking anxieties about China's formid formidable in the intensifying international AI race

and spurring U.S. startups to reexamine their own work after a foreign rival seemingly

did so much more with so fewer resources.

In late December, the small Chinese lab, based in Hangzhou, released V3, a language model with 671 billion parameters,

which was reportedly trained in two months for just $5.58 million.

That's a cost orders of magnitude less than OpenAI's GPT4, a larger model at an estimated

1.8 trillion parameters, but built with a $100 million price

tag. Last week, DeepSeek threw down another gauntlet, releasing a model called R1, which it claims

rivals OpenAI's O1 model on what's called reasoning tasks, like coding and solving complex math and science

problems. OpenAI charges users $200 per month for such models. DeepSeek offers its own

for free. The power of DeepSeek's model and its pricing are already shifting the way American

AI startups run their businesses.

Jesse Zhang, CEO of Decagon, which builds AI agents for customer service, told Forbes

that it's a cheap, compelling alternative to offerings from incumbents like OpenAI.

Deepseek's new model will likely force American AI giants like OpenAI and Anthropic to re-evaluate their own prices.

Azo Kant, CTO and co-founder of Poolside AI, a unicorn that builds AI for software engineering,

told Forbes that Deepseek's strength is in its engineering ability to do more with less.

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