ChinAI #359: DeepSeek's "Huawei-like" Mission in AI
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Overview
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Feature Translation: Understanding China through DeepSeek’s Triple-Jump Valuation
Context: Thanks everyone for voting on last week’s roundup issue. The winning selection is a Shuzi Lichang [数字力场] analysis of why DeepSeek’s valuation jumped three times within the span of under 20 days to over $50 billion. Zongming She1, a former deputy editor of The Beijing News commentary section and prominent media commentator, presents a fascinating case for DeepSeek as undertaking a “Huawei-like” mission in the AI domain.
Key Takeaways: Zongming’s thesis is that DeepSeek shoulders a burden akin to Huawei’s in telecommunications: facing external restrictions, it must invest in domestic capabilities and break through chokeholds. Zongming puts it simply: “Investing in DeepSeek = Betting on the Nation’s Destiny.”
The article describes DeepSeek V4’s optimization for deployment as Huawei’s Ascend chips as a “historic breakthrough in ‘chip-model partnership’ between domestic large language models and domestic computing power.”
The commentary posits, “Consequently, the ‘buffs’ that previously belonged to Huawei have now been bestowed upon DeepSeek.”
Jeff’s note: I think it’s important to not overstate the extent of indigenization here. As I noted in ChinAI #356: “In contrast to some hasty analysis, it is very likely that DeepSeek is still dependent on Nvidia chips for training; however, some of V4’s toolchain advances suggest gradual progress toward domestic substitution, especially on the inference side.”
Where does DeepSeek stand in the global landscape of frontier model builders?
It’s neither a super-platform like OpenAI nor a commercial giant like Anthropic which has seen its annual recurring revenue soar to $44 billion. Additionally, DeepSeek’s commercialization pales in comparison to Chinese rivals. From the article: “Looking for a ChatGPT-style, viral AI-to-Consumer (AI2C) hit product? DeepSeek would have to line up behind (ByteDance’s) Doubao.”
So why are people buying DeepSeek? According to Zongming: “From a purely technical standpoint, one is betting on its potential to become the ‘Android’ of the AI era.” The article points out that DeepSeek has “shattered the ‘Impossible Triangle’ of high performance, low cost, and open-source accessibility.” Though DeepSeek has probably not generated much revenue, Zongming calls back to the early days of Linux, which also did not optimize for short-term profits.
The commentary regards DeepSeek as a standard-bearer or “representative” for China’s AI sector as a whole.
Zongming sees a technical roadmap that breaks free from foreign technology dependencies as “the single greatest pillar of valuation support.” Interestingly, he interprets DeepSeek’s jump in valuation from $40 billion to $50 billion as “a premium for strategic scarcity.” From the piece, the foundation that supports DeepSeek’s valuation is a strategic imperative: “China’s need for a full-stack, independent AI.”
He also attributes the jump to the China Integrated Circuit Industry Investment Fund’s (AKA the “Big Fund”) interest in leading the investment into DeepSeek. To date, The Big Fund has focused investments in semiconductor equipment and production, and, per Financial Times reporting, it has not “publicly backed any of China’s other LLM players.”
The article concludes:
Ever since DeepSeek-R1 emerged last January as a “product of national strategic significance” [国运级产品], DeepSeek was no longer the DeepSeek of old.
Since that moment, DeepSeek’s destiny and fortune have become a small opening through which to understand China
FULL TRANSLATION: Understanding China through DeepSeek’s Triple-Jump Valuation
ChinAI Links (Four to Forward)
Must-read: The US Is Running Dangerously Low on China Expertise
In The Diplomat, Mercy Kuo interviewed Rosie Levine on the US-China Education Trust’s latest report “America’s China Talent Challenge.” This is a sad statistic from the report: this year, an estimated 2,000 Americans are studying in China, which is a sharp drop from 11,000 U.S. students studying in China in 2019.
Should-read: Interpret: China (A CSIS Open Source Project)
I wanted to shout-out this CSIS project that translates Chinese articles, speeches, policy documents, and other primary source materials. For some projects, they bring together experts on a particular topic and have them analyze a collection of translated documents.
Two ways to think about Xi-Trump Talks on AI
I gave some comments that contextualize how U.S.-China cooperation in AI could take shape.
1. Should-read: Why AI is the Hidden Minefield of Trump’s China Visit
For The New York Times, Vivian Wang set the table for the Trump-Xi talks on managing AI risks. Here, my view was that the goal for these talks was to send a high-level signal that allows the real work to happen at the informal, nongovernmental levels. This builds on research into how China made safety gains in other high-risk technologies, which highlighted the role of international industry associations (see: Reputation collectives: how international industry associations influence China’s safety standards in high-risk technologies).
2. Should-read: AI creates a fearsome cold-war-style dilemma
The Economist tackled why it is difficult for states to cooperate on safety for powerful technologies. One dilemma is that sometimes sharing safety information also improves the capabilities of rivals. This was less of a problem in the Cold War because safety technologies (e.g., permissive action links) were essentially separate add-ons to weapons systems (nowadays, they are more integrated), which means you could share safety information without divulging too much about capabilities.
Details
Still, as I argued in “Keep your enemies safer: technical cooperation and transferring nuclear safety and security technologies”, there was still substantial amounts of lab-to-lab cooperation on nuclear safety and security issues even amidst fierce geopolitical rivalry. Joint verification experiments served as a fruitful channel.
Thank you for reading and engaging.
These are Jeff Ding’s (sometimes) weekly translations of Chinese-language musings on AI and related topics. Jeff is an Assistant Professor of Political Science at George Washington University.
Check out the archive of all past issues here & please subscribe here to support ChinAI under a Guardian/Wikipedia-style tipping model (everyone gets the same content but those who can pay for a subscription will support access for all).
Any suggestions or feedback? Let me know at chinainewsletter@gmail.com or on Twitter at @jjding99
In previous issues, I mistook the author’s name as Zongming Yu. These have been edited.
Source
Originally published at chinai.substack.com.
