Chinese startup DeepSeek’s latest experimental model promises to increase efficiency and improve AI’s ability to handle a lot of information at a fraction of the cost, but questions remain over how effective and safe the architecture is.  

DeepSeek sent Silicon Valley into a frenzy when it launched its first model R1 out of nowhere last year, showing that it’s possible to train large language models (LLMs) quickly, on less powerful chips, using fewer resources.

The company released DeepSeek-V3.2-Exp on Monday, an experimental version of its current model DeepSeek-V3.1-Terminus, which builds further on its mission to increase efficiency in AI systems, according to a post on the AI forum Hugging Face.

“DeepSeek V3.2 continues the focus on efficiency, cost reduction, and open-source sharing,” Adina Yakefu, Chinese community lead at Hugging Face, told CNBC. “The big improvement is a new feature called DSA (DeepSeek Sparse Attention), which makes the AI better at handling long documents and conversations. It also cuts the cost of running the AI in half compared to the previous version.”

“It’s significant because it should make the model faster and more cost-effective to use without a noticeable drop in performance,” said Nick Patience, vice president and practice lead for AI at The Futurum Group. “This makes powerful AI more accessible to developers, researchers, and smaller companies, potentially leading to a wave of new and innovative applications.”

DeepSeek, however, says the experimental model works on par with its V3.1-Terminus. Despite speculation of a bubble forming, AI remains at the centre of geopolitical competition with the U.S. and China vying for the winning spot. Yakefu noted that DeepSeek’s models work “right out of the box” with Chinese-made AI chips, such as Ascend and Cambricon, meaning they can run locally on domestic hardware without any extra setup.

DeepSeek also shared the actual programming code and tools needed to use the experimental model, she said. “This means other people can learn from it and build their own improvements.”

But for Almasque, the very nature of this means the tech may not be defensible. “The approach is not super new,” she said, noting the industry has been “talking about sparse models since 2015” and that DeepSeek is not able to patent its technology due to being open source. DeepSeek’s competitive edge, therefore, must lie in how it decides what information to include, she added.

The company itself acknowledges V3.2-Exp is an “intermediate step toward our next-generation architecture,” per the Hugging Face post.

As Patience pointed out, “this is DeepSeek’s value prop all over: efficiency is becoming as important as raw power.”

“DeepSeek is playing the long game to keep the community invested in their progress,” Yakefu added. “People will always go for what is cheap, reliable, and effective.”

The Trump administration is pushing Taipei to shift investment and chip production to the U.S. so that half of America’s chips are manufactured domestically, in a move that could have implications for Taiwan’s national defense. 

Washington has held discussions with Taipei about the “50-50” split in semiconductor production, which would significantly reduce American dependence on Taiwan, U.S. Secretary of Commerce Howard Lutnick told News Nation in an interview released over the weekend. 

Taiwan is said to produce over 90% of the world’s advanced semiconductors, which, according to Lutnick, is cause for concern due to the island nation’s distance from the U.S. and proximity to China. 

“My objective, and this administration’s objective, is to get chip manufacturing significantly onshored — we need to make our own chips,” Lutnick said. “The idea that I pitched [Taiwan] was, let’s get to 50-50. We’re producing half, and you’re producing half.” 

Lutnick’s goal is to reach about 40% domestic semiconductor production by the end of U.S. President Donald Trump’s current term, which would take northwards of $500 billion in local investments, he said. 

Taiwan’s stronghold on chip production is thanks to Taiwan Semiconductor Manufacturing Co., the world’s largest and most advanced contract chipmaker, which handles production for American tech heavyweights like Nvidia and Apple. 

Taiwan’s critical position in global chips production is believed to have assured the island nation’s defense against direct military action from China, often referred to as the “Silicon Shield” theory.

However, in his News Nation interview, Lutnick downplayed the “Silicon Shield,” and argued that Taiwan would be safer with more balanced chip production between the U.S. and Taiwan.

“My argument to them was, well, if you have 95% [chip production], how am I going to get it to protect you? You’re going to put it on a plane? You’re going to put it on a boat?” Lutnick said. 

Under the 50-50 plan, the U.S. would still be “fundamentally reliant” on Taiwan, but would have the capacity to “do what we need to do, if we need to do it,” he added.

Beijing views the democratically governed island of Taiwan as its own territory and has vowed to reclaim it by force if necessary. Taipei’s current ruling party has rejected and pushed back against such claims. 

This year, the Chinese military has held a number of large-scale exercises off the coast of Taiwan as it tests its military capabilities. During one of China’s military drills in April, Washington reaffirmed its commitment to supporting Taiwan. 

Lutnick’s statements on the News Nation interview aligned with past comments from Trump, suggesting that the U.S. should get more in return for its defense of the island nation against China. 

Last year, then-presidential candidate Trump had said in an interview that Taiwan should pay the U.S. for defense, and accused the country of “stealing” the United States’ chip business. 

The U.S. was once a leader in the global semiconductor market, but has lost market share due to industry shifts and the emergence of Asian juggernauts like TSMC and Samsung. 

However, Washington has been working to reverse that trend across multiple administrations. 

TSMC has been building manufacturing facilities in the U.S. since 2020 and has continued to ramp up its investments in the country. It announced intentions to invest an additional $100 billion in March, bringing its total planned investment to $165 billion. 

The Trump administration recently proposed 100% tariffs on semiconductors, but said that companies investing in the U.S. would be exempt. The U.S. and Taiwan also remain in trade negotiations that are likely to impact tariff rates for Taiwanese businesses. 

YouTube has agreed to pay $24.5 million to settle a lawsuit involving the suspension of President Donald Trump’s account following the U.S. Capitol riots on Jan. 6, 2021.

The settlement “shall not constitute an admission of liability or fault,” on behalf of the defendants or related parties, according to a filing on Monday from the U.S. District Court for the Northern District of California.

Trump sued YouTube, Facebook and Twitter in mid-2021, after the companies suspended his accounts on their platforms over concerns related to the incitement of violence.

Since Trump won a second term in November and returned to the White House in January, the tech companies have been settling their disputes with the president. Facebook-parent Meta said in January that it would pay $25 million to settle its lawsuit with Trump. The following month, Elon Musk’s X, formerly Twitter, agreed to settle its Trump-related case for roughly $10 million.

In August, several Democratic senators, including Elizabeth Warren of Massachusetts, sent a letter to Google CEO Sundar Pichai and YouTube CEO Neal Mohan expressing their concern over a possible settlement with the president.

The senators said in the letter that they worried such an action would be part of a “quid-pro-quo arrangement to avoid full accountability for violating federal competition, consumer protection, and labor laws, circumstances that could result in the company running afoul of federal bribery laws.”

WATCH: President Trump signs TikTok deal.