What is the impact of DeepSeek, China’s new AI model?
Introduction
There was mass shock this week when DeepSeek, a Chinese artificial intelligence (AI) company, emerged out of nowhere as a formidable player in the global AI landscape, challenging long-held assumptions about what it takes to develop cutting-edge models. Founded in 2023 and based in Hangzhou, DeepSeek became the most downloaded free app in the US just a week after it was launched. Why all the fuss? DeepSeek produced an open-source large language model (LLM) that rivals those of established Western firms, but for a fraction of the price.
The stock market reacted in panic to this shakeup of the race for AI dominance. The share price of Nvidia –– the company behind the advanced chips that dominate many AI investments –– plummeted by roughly 17% on Monday, wiping almost $600bn (£482bn) off its market value, the greatest one-day drop ever for a US company [1]. President Donald Trump called it “a wake-up call” for the US tech industry [2]. The markets have since steadied, but the global reaction reflects the growing realisation that AI breakthroughs are no longer confined to Silicon Valley or the largest research labs; innovation is becoming more decentralised and potentially disruptive to established market leaders. This shift could have profound implications for AI development worldwide, particularly in Ireland, where a thriving tech sector is heavily invested in AI innovation.
DeepSeek and Ireland
The impact of DeepSeek’s flagship model, DeepSeek-R1, is difficult to ignore. Trained with an investment of approximately $5.6 million — compared to the estimated $100 million to $1 billion spent by American competitors — its success challenges the prevailing notion that AI progress is reserved for companies with vast financial and computational resources. Much of this efficiency comes from innovative training methodologies, including a technique known as “mixture of experts,” which ensures that only the necessary computational resources are activated at any given time. This reduces energy consumption and operational costs while maintaining high performance, making AI more accessible to businesses, research institutions, and governments that might otherwise be priced out of the AI race.
For Ireland, a country that has positioned itself as a European hub for technology and artificial intelligence, DeepSeek’s rise presents both opportunities and challenges. The country’s status as a home to major multinational tech companies means that shifts in AI development strategies will have direct consequences for its economy and workforce. At the same time, Ireland’s strong research institutions and dynamic startup ecosystem are well-positioned to capitalise on the democratisation of AI technology.
The shift towards more efficient AI development could encourage Ireland’s own AI research initiatives, for example. DeepSeek’s success demonstrates that cutting-edge AI can be built with relatively limited resources, provided that innovative techniques are employed. Irish universities and research institutions could take inspiration from this model, focusing on efficiency-driven AI methodologies that align with Ireland’s strengths in software development and data science.
Equally, DeepSeek has made its technology open source, meaning its code is freely available for anyone to use or modify. As Mark Kelly, Founder of AI Ireland, told RTÊ, “Entrepreneurs and small to medium enterprises that are looking at this advancement are saying we can take this tech and now compete because DeepSeek has made it open source…So now, organisations can take that technology and use it to reimagine their service offering” [3]. If cultivated effectively, this could lead to new homegrown AI solutions that bolster Ireland’s position in the global AI economy.
However, there are also challenges to consider. Many of the multinational technology companies operating in Ireland have historically relied on significant investment in AI infrastructure. If DeepSeek’s approach signals a broader industry shift towards leaner, more efficient AI models, these companies may need to rethink their strategies. Some may scale back large-scale AI operations, potentially affecting employment and investment in Ireland. “We know that the US tech firms are so important to the Irish ecosystem, with the top seven companies here,” said Kelly. “The chances of this having a ripple effect are very big because they are investing six or seven hundred billion into this tech and if they don’t get the outcomes they expect then that will lead to job losses” [4]. Others may need to pivot towards AI applications that integrate more seamlessly with emerging models like DeepSeek’s, leading to shifts in workforce requirements and expertise.
It’s also necessary to consider the geopolitical aspect.
Tech wars: China vs the west
Beyond business concerns, DeepSeek’s Chinese origins raise significant geopolitical and security questions. The West has long been wary of Chinese technology companies, with concerns about data security, state influence, and national security risks driving regulatory scrutiny. The ongoing tensions surrounding TikTok in the US, including what nearly amounted to a nationwide ban due to fears of Chinese government access to user data, highlight the broader unease about China’s role in global tech. Already, Ireland and Italy have become the first countries to block the app, removing it from both the App Store and Google Play Store after the regulatory authorities in both countries raised concerns about the app’s handling of user data [5]. While the app is unavailable for download, it remains functional for users who previously downloaded it.
Voicing concern about the app prior to the ban, Fianna Fáil TD Malcolm Byrne explained: “If our data is stored in Ireland or other parts of the European Union, there are strong safeguards in place as to how that data will be used. If data is stored in China, those safeguards do not exist…The Chinese Communist Party can use its National Security Law to access this data.” [6]
The European Union has already taken steps to limit Chinese tech influence, particularly in telecommunications, with restrictions on Huawei’s 5G network equipment. DeepSeek’s emergence will prompt similar discussions in Europe with regards to AI regulation, particularly concerning data security and potential dependencies on foreign technology. Policymakers may need to consider whether safeguards should be implemented to prevent overreliance on AI models developed in geopolitical rivals. Ireland’s Data Protection Commission has already requested information from DeepSeek about data processing conducted in relation to Irish users [7].
At the same time, DeepSeek’s emergence also has significant consequences for Western AI firms. Companies like Nvidia, OpenAI, and Google DeepMind have long held dominance in AI development, but the rise of a powerful, efficient Chinese competitor could force them to adapt. This could lead to accelerated innovation in AI development, with a stronger emphasis on efficiency and cost reduction. On the other hand, it may also lead to increased trade tensions between the West and China, particularly if US or EU regulators impose restrictions on the use of Chinese-developed AI models.
Another key challenge is talent development. As AI becomes more efficient and widely accessible, the nature of AI expertise will evolve. There will be a growing need for professionals who understand not just traditional AI development, but also efficient training methodologies, AI ethics, and real-world applications of these technologies. Ireland’s educational institutions must keep pace with these shifts, updating curricula and expanding AI-focused programs to prepare the next generation of talent for a rapidly changing industry. Already there are concerns the country is falling behind, with John Clancy, founder and CEO of the Irish firm Galvia AI, arguing that “we are sleepwalking into inertia in this part of the world…We need to wake up.” [8]
What next?
Looking ahead, Ireland has an opportunity to position itself as a leader in ethical and efficient AI. By fostering closer collaboration between academia, industry, and government, the country can develop innovative AI solutions tailored to its economic and societal needs. Supporting startups and SMEs in AI-driven sectors will also be essential, as they are often the quickest to adapt to new technologies and business models.
In many ways, DeepSeek’s emergence marks a turning point for the global AI industry. It challenges the notion that only the largest and most well-funded companies can drive AI progress, opening the door for more decentralised innovation. For Ireland, this presents a unique moment to embrace these changes, leveraging its tech ecosystem, regulatory expertise, and research capabilities to carve out a distinct role in the future of AI. By doing so, it can ensure that it remains not just a participant in the AI revolution, but a leader in shaping its trajectory.
Sources
[2] https://www.bbc.co.uk/news/articles/c4gpq01rvd4o
[3] https://www.rte.ie/news/ireland/2025/0128/1493478-deep-seek-ireland/
[4] https://www.rte.ie/news/ireland/2025/0128/1493478-deep-seek-ireland/
[6] https://www.rte.ie/news/ireland/2025/0128/1493478-deep-seek-ireland/
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