By Anjan Roy
The sudden emergence of a Chinese AI model has upset the settled world of Western AI industry. The Chinese had released its indigenously developed AI machine in the third week of January 2025. What followed thereafter is anarchy. Technology majors of America suffered market capitalisation loss that no one had seen before.
Nvidia, until then the darling and indomitable leader in sophisticated chip manufacturing industry, was regaining monarch. But at one go, Nvidia’s market value dropped by $500 billion. Other technology stocks, including AI major OpenAI, which had developed and released the ChatGPT machine, also suffered humiliation.
Now, the phalanx of the US technology supers, including Microsoft and Open AI, are hitting back at the Chinese AI model, DeepSeek. Overcoming the initial shock, they are now alleging that the Chinese AI modellers have stolen from the US OpenAI model and built its engine on the basis of the US developers.
At the same time, the limitations of the Chinese wunderkind is becoming more visible. This is being confirmed by the Indian technology sector leaders as well. The Chinese AI model has been trained so that it should remain within the parameters of the Chinese Communist Party guidelines on geopolitics or society.
When the Chinese model is being queered on the Tiananmen Square incident in 1989 in which protestors were killed, the Chinese model refused to answer. Instead, the DeepSeek engine said: “let us talk about something else”.
Indian technology buffs also report that the Chinese model refuses to elaborate on the spat between India and China over Arunachal Pradesh. Nor are replies provided on questions relating to Tibet and its autonomous status. The answers given are apparently only within the broad parameters of the policies of the Chinese government.
The primary reason why the release of the Chinese AI model had rattled the entire US stock market and eroded the value of its technology majors is that the model has reportedly been trained at a fraction of the costs incurred by the earlier OpenAI’s Chat GPT engine.
While OpenAI spent upwards of a billion dollars, the Chinese model has been trained at just $5.6 million. Such cheaper models can make all the difference in the commercial aspects of the engines. They would beat hands down on the market, where the buyer would seek out such cost effective solutions.
The entire brouhaha over the Chinese AI model has an altogether different lesson for India. After all, the OpenAI model was available and Indian tech industry players were aware of what was going on. However, not one Indian technology major had achieved anything remotely comparable to the Chinese company.
Immediately after the release of the Chinese model, the newly elected US president Donald Trump had taken note of it and said this should work as an eye-opener for the US industry. That a Chinese company could come out with such an engine when the country of origin was cut out from the market for sophisticated chips and other technology products, showed the Chinese ingenuity at the game.
The Chinese developers have overcome all the limitations imposed on them by the Americans by suspending supplies of key components.. Despite their supply cuts, the Chinese entrepreneurs and their research teams have come up with such products. India has far better relations with the Americans and Indians are in a position of front runners in American companies. Despite that the Indian companies and technology specialists could not come up with this sort of innovation on their own.
Moreover, these developments have a special significance for the future of AI tech in Indian industry. The Open AI software or the Chinese one as well, could act to throw out the prevailing supply chains. Indian industry which is working as lower end providers of IT services and coding jobs, may find their work space eaten up by these AI models.
Some industry experts believe that the entire current day organisational structure of the IT and IT Services industry is set to change drastically. What will happen to the Indian IT products suppliers to the International majors? These experts feel that India must start thinking about what was to come and how to mitigate the adverse impact of these developments.
India had been a world champion and had beaten the Chinese in the IT services sector. It now looks that the Chinese would cut the ground under the feet of the Indian ITeS industry. This could be a huge blow for the country as a whole as the ITeS industry has major macro economic impact on India.
When India had witnessed growth without much contribution to jobs creation, the labour intensive ITeS industry had provided a much needed succour. If that sources dry up, it will be a major calamity. (IPA Service)
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