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Hello from Tokyo, this is Katey Creel, Nikkei Asia’s tech editor.
One of the most common mistakes in journalism is to expect downtime in the news cycle. While companies, analysts and even a few journalists were looking forward to some well-earned time off over the Lunar New Year holiday this week, DeepSeek had other ideas.
Sputnik Moment
The Chinese company’s sudden release of a chatbot that it says was radically cheaper to develop dropped a bomb on an industry that for the past two years has operated under the assumption that the only way forward in AI was to have more computing firepower. Its arrival is a reminder that tech hype can be both a boon and bane for the stock market. When OpenAI introduced the world to generative AI with its ChatGPT chatbot, it kicked off a years-long rally in tech shares and turned Nvidia, a chipmaker known mostly among gamers, into a multitrillion-dollar industry leader (and its CEO into something of a rock star).
The Future of AI
This time around, the innovation is threatening to puncture the bubble — if powerful AI models can be developed without Nvidia’s pricey hardware, the bullish case for AI spending suddenly looks a lot shakier. "If" being the operative word. DeepSeek puts its achievements down to innovation and clever use of less powerful chips. More sceptical observers say it may be piggybacking on western technologies or relying on more advanced US hardware than it claims.
Rare-Earths: A New Frontier
Beneath the fertile farmlands of Victoria in south-east Australia lie deposits of mineral sands that miners and politicians are keen to tap for rare-earth elements, ingredients in everything from EV batteries to wind turbines to advanced weapons. Two mineral sands projects recently passed the environmental assessment stage, and others are in the pipeline. Victoria’s state government sees a potential second gold rush if these projects succeed, while the federal government is keen to develop domestic resources to build a "China-free" supply chain of critical minerals, writes Nikkei Asia’s Shaun Turton.
SoftBank’s Ambitions
Masayoshi Son is stepping up his hunt for deals to match his vaunted ambitions for the artificial intelligence sector. SoftBank is in talks to lead a funding round for AI robotics start-up Skild AI that would more than double its valuation to close to $4bn, write the Financial Times’ Stephen Morris, David Keohane, and George Hammond. The fresh investment, which was confirmed by three people familiar with the matter, would eclipse the $300mn raised in the company’s first round in July and has been given the green light by the SoftBank founder. However, the people cautioned talks were still at an early stage and there was no guarantee they would be successful. SoftBank declined to comment. Skild did not respond to a request for comment.
Tencent’s Overseas Gaming Gambit
China’s top esports teams are still capable of filling stadiums, as the sold-out Honor of Kings championship event late last year showed. But with gaming revenues plateauing and regulatory uncertainty hanging over the sector, gaming giant Tencent and its compatriots are looking overseas for new growth, writes Nikkei Asia’s Wataru Suzuki. A major target is south-east Asia, where esports revenues were just one-sixth those of China’s in 2022, according to calculations by Niko Partners. Venturing overseas, however, means taking on new rivals as well as having to adapt to markedly different gaming habits and preferences.
Distillation or Innovation?
One of the biggest questions surrounding DeepSeek, the Chinese AI developer shaking up the tech world, is just how it achieved its claimed breakthrough in low-cost model training. One suggestion is distillation, or using a bigger, more robust model to develop a smaller, more nimble one, Nikkei Asia’s Ryohtaroh Satoh writes. Whether and how much the company relied on this approach is not clear — DeepSeek says it used "optimised co-design of algorithms, frameworks and hardware" — but distillation could have broader implications for the AI industry. As more companies look to deploy artificial intelligence in their operations, many are looking for more affordable models that are quicker to develop and more tailored to their needs, all things that distillation could deliver.
Conclusion
The tech world is abuzz with the latest developments in the field of artificial intelligence. From the rise of low-cost AI models to the growth of the gaming industry, there are many exciting opportunities and challenges on the horizon. As we continue to navigate this rapidly evolving landscape, it is essential to stay informed and up-to-date on the latest news and trends. At Nikkei Asia, we are committed to providing you with the latest insights and analysis on the tech industry, so you can stay ahead of the curve.
FAQs
Q: What is the significance of DeepSeek’s announcement?
A: DeepSeek’s announcement is significant because it challenges the prevailing assumption that more powerful computing hardware is necessary for developing advanced AI models.
Q: What is distillation in the context of AI?
A: Distillation refers to the process of using a bigger, more robust model to develop a smaller, more nimble one.
Q: What is the potential impact of DeepSeek’s technology on the AI industry?
A: DeepSeek’s technology has the potential to revolutionize the AI industry by making it more accessible and affordable for companies to develop and deploy AI models.
Q: What are the implications of SoftBank’s investment in Skild AI?
A: SoftBank’s investment in Skild AI has the potential to accelerate the development of AI technology and bring it closer to widespread adoption.
Q: What is the significance of Tencent’s overseas gaming gambit?
A: Tencent’s overseas gaming gambit is significant because it highlights the company’s ambitions to expand its gaming business beyond China and tap into the growing demand for gaming in other regions.
