DeepSeek, a Chinese artificial-intelligence startup that’s just over a year old, has stirred awe and consternation in the world after demonstrating AI models that offer comparable performance to the world’s best chatbots at seemingly a fraction of their development cost.
Chinese startup DeepSeek has taken the tech world by storm, surpassing ChatGPT to become the top-rated free application on Apple’s App Store in the U.S. It is considered to be a significant milestone, achieved just weeks after its launch was confirmed on January 10, 2025 and it marks a pivotal moment for AI innovation, underscoring DeepSeek’s potential to rival the dominance of American AI models.
DeepSeek’s success is powered by its proprietary DeepSeek-V3 model, which has been described as a breakthrough in open-source AI. According to its creators, this model not only surpasses other open-source platforms but also competes with some of the most advanced closed-source systems globally. Its ability to deliver high performance while being cost-efficient has earned it widespread acclaim, shaking up preconceptions about China’s capabilities in artificial intelligence.
The DeepSeek Revolution: A Challenge to US Dominance
The emergence of DeepSeek as a leader in the AI landscape highlights China’s growing expertise in the field, even amidst strict US export controls aimed at limiting China’s access to advanced chips necessary for training such models. Remarkably, DeepSeek researchers claim they trained the model using Nvidia’s H800 chips, a less powerful alternative to the advanced chips restricted by the Biden administration. Moreover, they achieved this feat with a training budget of just $5.6 million—a stark contrast to the billions of dollars typically spent by tech giants like Meta, Alphabet, and OpenAI.
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This achievement has sparked intense discussions in Silicon Valley, with US tech executives questioning the efficacy of current export bans. DeepSeek’s efficiency in training an AI model capable of rivaling the best American systems is seen as a potential game-changer, prompting a reassessment of global AI competition strategies.
What exactly is DeepSeek?
DeepSeek was founded in 2023 by Liang Wenfeng, the chief of AI-driven quant hedge fund High-Flyer. The company develops AI models that are open-source, meaning the developer community at large can inspect and improve the software. Its mobile app surged to the top of the iPhone download charts in the US after its release in early January.
The app distinguishes itself from other chatbots like OpenAI’s ChatGPT by articulating its reasoning before delivering a response to a prompt. The company claims its R1 release offers performance on par with the latest iteration of ChatGPT. It is offering licenses for individuals interested in developing chatbots using the technology to build on it, at a price well below what OpenAI charges for similar access.
Ripple Effects in the Market
The rapid rise of DeepSeek has already brought various implications in global markets. Wall Street has seen many declines in major indexes and tech organizations are sensing the pressure as investors reacted to the competitive threat posed by this Chinese AI startup. Organizations such as Nvidia, which have invested heavily in AI technologies, experienced significant stock price drops. The Asian markets were similarly affected, with Tokyo’s Nikkei taking a hit, and key players like SoftBank and Advantest seeing steep losses.
DeepSeek’s ascent has not only intensified global AI competition but also highlighted China’s ability to innovate under constraints. As the world watches this small Hangzhou-based startup, it’s clear that DeepSeek is more than just a competitor—it’s a force reshaping the AI landscape.