BEIJING (Agencies): Chinese artificial intelligence app DeepSeek has shaken the AI industry by surpassing ChatGPT and other rivals to become the top-rated free app on Apple’s App Store in the US, UK, and China.
Launched in January, DeepSeek has challenged the dominance of US-based AI companies, with its open-source DeepSeek-V3 model developed for a reported cost of less than $6 million. This figure starkly contrasts with the billions spent by competitors like OpenAI. However, some experts in the AI field have cast doubt on these claims.
DeepSeek gained global attention after introducing DeepSeek-R1 earlier this month, which the company claims performs on par with OpenAI’s advanced models in tasks like mathematics, coding, and natural language reasoning. Silicon Valley venture capitalist and Donald Trump advisor Marc Andreessen called it “AI’s Sputnik moment,” likening it to the Soviet Union’s launch of the first artificial satellite in 1957.
China’s restrictions on importing advanced chips, widened by the US government since 2021, have spurred domestic developers to innovate. By sharing research and optimizing technology to require less computing power, Chinese AI firms like DeepSeek have managed to cut costs and increase efficiency.
Founder Liang Wenfeng, based in Hangzhou, reportedly stockpiled Nvidia A100 chips—now banned from export to China—and paired them with lower-cost imported chips to train the model. This innovative approach is seen as a game-changer in the industry, reducing the infrastructure costs associated with AI development.
DeepSeek’s rise has sent shockwaves through global markets. Shares of major US AI-related companies, including Nvidia, Microsoft, and Meta, dropped on Monday, while European tech firms like ASML and Siemens Energy saw steep declines of over 10% and 21%, respectively.
“This low-cost Chinese model has caught the market by surprise, raising concerns about the profitability of rivals who have invested heavily in expensive AI infrastructure,” said Fiona Cincotta, senior market analyst at City Index.
Singapore-based technology advisor Vey-Sern Ling warned that DeepSeek could potentially derail the investment outlook for the global AI supply chain. However, Wall Street giant Citi noted that access to advanced chips remains a key advantage for US companies, which could maintain their edge over Chinese firms in a restrictive trade environment.
In a bid to counter challenges from abroad, a consortium of US tech firms recently announced The Stargate Project, an initiative to invest $500 billion in AI infrastructure in Texas.
DeepSeek’s rapid ascent marks a pivotal moment in the AI race, highlighting the growing competition between China and the US while underscoring the transformative potential of cost-effective AI development.