Today (January 29, 2025), nearly a quarter of the world’s population welcomes the Year of the Snake 🐍, bidding farewell to the mythical Dragon. The past Year of the Dragon has seen a number of events whose significance can not be overlooked: in December '24 China revealed two new, previously unknown stealthy sixth-generation technology demonstrators, marking a turning point in the history of military innovation that was from the 17th century the exclusive domain of Western states.
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But without a doubt the single most significant event took place "at the tail" of the Dragon's year: On January 27th, a Chinese firm called DeepSeek, bearing an AI model that it said cost less than $6m to train, blew a nearly $600bn hole in the value of U.S.-based semi-conductor giant Nvidia, marking the biggest one-day loss in the history of America’s stockmarket. DeepSeek’s ability to produce AI models almost as capable as America’s best ones, using what look to be fewer and less-advanced graphics processing units (GPUs), challenges the belief that winning the AI race requires pouring gazillions of dollars into chips. Microsoft, Meta, Elon Musk’s xAI, and a joint venture known as Stargate that includes OpenAI, maker of ChatGPT, have all announced blockbuster plans in recent weeks to build data centres stuffed with GPUs. But, according to an insider at one big Nvidia customer, the lesson being taken from DeepSeek is that, when it comes to training and running models, it may be possible to spend much less on processing power. That would be bad news for Nvidia. To make matters worse, competition from rival chipmakers has been stiffening. Nvidia’s GPUs are almost indispensable for the training of large language models (LLMs). But the latest “reasoning” models from DeepSeek and OpenAI derive their superior performance not from training but from more time spent on inference (known as test-time compute), which could tilt the market in favour of rival chipmakers.
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Then there is the hype question: like investment in the early days of the internet, the AI boom has so far been based more on the belief that it will change everything than hard evidence that it can generate returns. DeepSeek's AI, developed at a fraction of typical costs, has raised concerns about the future profitability of U.S. tech companies specializing in microchips and AI technologies. As a result, the U.S. stock market faced a significant downturn on January 27th, losing nearly $2 trillion in a single day.

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But even more important, DeepSeek’s AI shooked the deeply-rooted believe in the West that the U.S. will remain the undisputed market leader in all major technology driven sectors some time being. China's wake-up call of last Monday sent shockwaves that reached all the way to the White House.

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So while the Year of the Dragon came to an end today, the Age of the Dragon has only just began..
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To honour the nearly 2 billion people celebrating today: ”Xīnnián hǎo” (新年好), or Happy New Chinese New Year! 🧧