S&P: DeepSeek's disruptive impact on China's tech industry

On February 10, S&P Global Ratings stated that DeepSeek's large language model has shattered the industry's conventional views on the cost of AI. The arms race for Nvidia chips, which companies used to spend extravagantly on, has now become a more evenly matched competition. S&P Global Ratings believes that the launch of the DeepSeek model will enable Chinese internet companies to swiftly adopt high-performance and cost-effective AI models, which is a positive development for numerous Chinese companies that cannot obtain cutting-edge chips. "The breakthrough of DeepSeek also signifies that it is feasible to develop leading large language models by utilizing China's existing AI infrastructure," said S&P Global Ratings credit analyst Glib Valov. "Although it may not impact the rating in the short term, it implies that there is potential for an upturn in the business situation of China's technology industry." The Chinese government's technology policy involves mobilizing government and private funds and manpower. The restrictions on the export of advanced technologies from the United States have instead heightened the urgency of this mobilization. "These restrictions have an unforeseen consequence of compelling Chinese companies to enhance their efficiency, which has spurred innovation in China's technology industry," said Zhang Jihao, chief analyst of S&P Global Ratings' China credit research. "The abundant talent pool is an advantage for Chinese companies."