The artificial intelligence breakthrough that is sending shock waves through stock markets, spooking Silicon Valley giants, and generating breathless takes about the end of America’s technological dominance arrived with an unassuming, wonky title: “Incentivizing Reasoning Capability in LLMs via Reinforcement Learning.”

The 22-page paper, released last week by a scrappy Chinese A.I. start-up called DeepSeek, didn’t immediately set off alarm bells. It took a few days for researchers to digest the paper’s claims, and the implications of what it described. The company had created a new A.I. model called DeepSeek-R1, built by a team of researchers who claimed to have used a modest number of second-rate A.I. chips to match the performance of leading American A.I. models at a fraction of the cost.

DeepSeek said it had done this by using clever engineering to substitute for raw computing horsepower. And it had done it in China, a country many experts thought was in a distant second place in the global A.I. race.

Some industry watchers initially reacted to DeepSeek’s breakthrough with disbelief. Surely, they thought, DeepSeek had cheated to achieve R1’s results, or fudged their numbers to make their model look more impressive than it was. Maybe the Chinese government was promoting propaganda to undermine the narrative of American A.I. dominance. Maybe DeepSeek was hiding a stash of illicit Nvidia H100 chips, banned under U.S. export controls, and lying about it. Maybe R1 was actually just a clever re-skinning of American A.I. models that didn’t represent much in the way of real progress.

Eventually, as more people dug into the details of DeepSeek-R1 — which, unlike most leading A.I. models, was released as open-source software, allowing outsiders to examine its inner workings more closely — their skepticism morphed into worry.

And late last week, when lots of Americans started to use DeepSeek’s models for themselves, and the DeepSeek mobile app hit the number one spot on Apple’s App Store, it tipped into full-blown panic.

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