Trump White House Reviews Chinese AI Firm DeepSeek for National Security

On Tuesday, the White House announced that the National Security Council is examining the implications of DeepSeek, a Chinese artificial intelligence (AI) company.

Recent Developments: White House press secretary Karoline Leavitt confirmed this review, stating, “This is a wake-up call to the American AI industry,” as reported by Reuters.

Leavitt echoed comments made by former President Donald Trump, reaffirming the White House's commitment to maintaining the United States' leadership in AI innovation.

The review is prompted by growing concerns over intellectual property theft, a point raised by David Sacks, who serves as the White House’s AI and crypto czar.

Context and Implications: In a recent interview on Fox News, Sacks warned about the AI technique called distillation, where one AI model learns from another model, posing a potential threat to innovation. He predicted that in the coming months, leading AI companies will take measures to prevent this practice in order to slow down the emergence of copycat models.

Additionally, veteran investor Ross Gerber criticized DeepSeek’s privacy practices, raising concerns over the storage of user data on servers located in China.

Meanwhile, Alibaba Group Holding (NYSE:BABA) has unveiled a new AI model, named Qwen2.5-VL, which aims to compete with offerings from OpenAI.

In response to the competitive risks posed by DeepSeek, OpenAI has launched a specialized version of ChatGPT tailored for U.S. government agencies.

The technology sector reacted strongly to these developments, with a global sell-off of technology stocks attributed to fears that DeepSeek's cost-effective model might disrupt American AI companies. Notably, shares of Nvidia Corporation (NASDAQ:NVDA), a prominent U.S. manufacturer of high-performance AI chips, saw a drastic drop of 17%, resulting in an unprecedented loss of approximately $600 billion in market capitalization.

Moreover, the Nasdaq 100 index fell over 3% on Monday, marking its steepest drop since December 18.

Previously, during his administration, former President Joe Biden instituted stringent export controls on AI chips and production equipment for companies like Advanced Micro Devices Inc. (NASDAQ:AMD) to hinder China's advancements in AI technology.

Stay tuned for further updates on this evolving situation.

AI, DeepSeek, NationalSecurity