Overview
Over the past two days, a couple of significant announcements have set the stage for a fascinating AI arms race between the United States and China.
Yesterday, we learned more about the “Stargate Project” - an American AI initiative focused on winning the AI arms race against China. This project promises a staggering $500 billion in funding for AI infrastructure.
Does that mean the US isn’t yet winning the race? Quite possibly. On Monday, the Chinese company DeepSeek released its new, open-source model (DeepSeek-R1), which claims to surpass OpenAI o1 at a fraction of the cost.
What is Stargate? $500 billion Investment in AI Infrastructure
Stargate is described as a new American “company”. The focus appears to be on the infrastructure supporting AI – massive data centers that are already in the works in Texas.
Softbank’s chairman, Masayoshi Son, is a key driver behind the financing of this initiative and has stated that the goals are not just AGI “Artificial General Intelligence” but instead Artificial “Superintelligence”.
According to a short OpenAI blog post, the project will be financed by SoftBank, OpenAI, Oracle, and MGX. The key technology partners have been listed as ARM, Microsoft, NVIDIA, Oracle, and OpenAI. That’s a pretty solid list of tech companies, by any measure. Although it’s presented as a patriotic American effort it looks like much of the funding is coming from Japan and the UAE and the UK is also a tech partner with ARM in the mix.
This isn’t entirely new; instead, it appears to have been in the works for almost a year from Microsoft and OpenAI. However, the amount has increased from $100B quote in 2024, to $500B quote yesterday over 5 years. Stating the obvious, $500 billion is an eye-watering amount, even when spread over multiple years.
Is the United States playing catch-up to China?
At the press conference, Larry Ellison and Sam Altman spoke about the opportunities for medical advancements, including the development of cancer vaccines. Despite the exciting claims about Stargate’s medical advancements, Stargate’s enormous investment appears to be aimed at getting to AGI before China.
It’s certainly interesting timing, given the advancements in DeepSeek’s new “R1” model this week. DeepSeek-R1 has been described as “like OpenAI and Meta had a baby” and at a fraction of the price. If you check out the trending models in HuggingFace right now, the list is dominated by DeepSeek.
For an in-depth comparison of model costs and capabilities, check out this analysis: The Chinese Obliterated OpenAI: A Side-by-Side Comparison of DeepSeek-R1 vs. OpenAI’s O1.
Of course, there’s more to it than DeepSeek. There’s also Alibaba's “Qwen” models which stack up in terms of performance yet come in at a fraction of the cost.
If the US wants to “win” AI, the cost gap is going to have to decrease.
Let’s not forget the UK!
Britain has a strong history of involvement in AI, with DeepMind the obvious example. The presence of ARM is an exciting one in Operation Stargate, which should similarly be a shot in the arm for British AI credibility.
Let’s not forget just last week the UK’s own AI Opportunities Action Plan was released. While the UK’s $14 billion doesn’t get close to Stargate numbers, one key difference, of course, is Stargate appears to be predominantly financed by the private sector.
The UK has always been a phenomenal place for start-ups, and with ARM leading the charge in the Stargate operation, I’m excited to see what will come next.
Other European countries are making investments, for example, Spain announced €150m yesterday, but this is a drop in the ocean compared to Stargate. European countries are further hindered by a focus on regulation, small domestic markets and political upheaval making credible competition unlikely.
Realities for the enterprise: navigating data privacy implications
The explosion of AI infrastructure presents challenges for security leaders who are already grappling with how to implement effective guardrails. Data privacy concerns remain one of the top barriers to widespread AI adoption.
While DeepSeek’s model is open-source and offers a ChatGPT-like interface, its data training policies are notably vague.
It’s a good idea to establish clear guidelines for AI usage, whether your employees are using ChatGPT, DeepSeek, or any other platform.
DeepSeek is already listed as one of the apps in Harmonic’s AI App Index, underscoring its growing presence in the AI landscape. Do you know if any of your employees are using DeepSeek?
Arms Race has Started
This unfolding AI arms race between the United States (& the UK!) and China is rapidly reshaping the global tech landscape.
With the US. ramping up its efforts through the $500 billion Stargate Project, there is genuine excitement for the benefits improved AI infrastructure could bring.
Meanwhile, China’s DeepSeek-R1 and Alibaba’s Qwen models are pushing boundaries with cost-effective and high-performing solutions, signaling fierce competition.
The race is on, and its impact is going to be massive.
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