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DeepSeek complicates regional data centre choices

29 January 2025

Commentary
Jennifer Aguinaldo
Energy & technology editor

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DeepSeek, a Chinese-developed free artificial intelligence (AI)-powered chatbot, shot to fame over the past week.

According to users, it looks, feels and works very much like ChatGPT, the generative AI developed by US-based Open AI.

In addition to becoming a feasible option for those willing to try the app for work or fun, DeepSeek is understood to have been trained at a fraction of the cost – around $6m – compared to an estimated $100m for the latest version of ChatGPT.

The BBC has reported that DeepSeek’s founder, Liang Wenfeng, built up a store of Nvidia A100 chips, which have been banned from export to China since September 2022.

His collection, which some estimate has reached 50,000, helped his company build a powerful AI model by pairing these chips with cheaper, less sophisticated ones.

US officials have warned of the app’s security loopholes, while critics have pointed out that DeepSeek’s training parameters omitted events that took place in Tiananmen Square in 1989.

Nevertheless, the hardware architecture behind DeepSeek presents a crossroads for the region’s data centre operators, assuming US President Donald Trump does not overturn a new regulation restricting access to US-made advanced AI chips outside its closest allies.

Over $10.6bn-worth of data centres, some catering to hyperscalers such as Amazon Web Services and Microsoft, are planned to be developed and built across the GCC states, according to the latest available data from MEED Projects.

This is a conservative estimate, given potential investments such as the $5bn planned between US asset investment firm KKR and the UAE-based Gulf Data Hub.

It also excludes spending by government entities to develop AI capabilities in defence, security, healthcare and, plausibly, energy.

The new regulation implies that the GCC states are categorised as mid-ter countries, which means exports of 50,000 graphics processing units (GPUs) will apply between 2025 and 2027.

Individual companies from these countries will only be able to achieve higher computing capability if they comply with US regulations and obtain validated end user status.

A policy creating a scarcity of advanced chips may backfire and have the unintended consequence of driving less developed economies to be more efficient, as DeepSeek has demonstrated.

Pairing these powerful, expensive chips with more affordable ones sourced elsewhere to drive AI development is an option that is now on the table – not just in China but closer to home as well.  

Related read: AI chip restriction may slow down GCC data centre boom

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Jennifer Aguinaldo

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