A Chinese artificial intelligence model, DeepSeek, has become the most-downloaded free app on Apple’s App Store.
This is sending shockwaves through the tech industry.
Its rapid rise has stunned investors and triggered a major sell-off in global markets.
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What is DeepSeek?
DeepSeek is an AI-powered chatbot similar to OpenAI’s ChatGPT.
It runs on a model called R1, which has 670 billion parameters, making it the largest open-source large language model to date.
Experts say it matches OpenAI’s latest models in mathematics, coding, and reasoning.
Unlike many AI models, DeepSeek was reportedly built for just $6 million by using a combination of Nvidia A100 chips and lower-cost alternatives.
However, it follows China’s strict censorship policies, avoiding politically sensitive topics like Tiananmen Square.
A Game-Changer for the AI Industry
Released on 20 January, DeepSeek initially attracted attention from AI enthusiasts but quickly gained traction across the industry.
Its cost-efficient development challenges the belief cutting-edge AI requires massive budgets and the most advanced hardware.
Market Shock and Financial Fallout
DeepSeek’s rise caused a major disruption in financial markets on January 27.
Nvidia, the world’s leading chipmaker, lost nearly $600 billion in market value in a single day, marking the largest one-day loss in U.S. history.
The Nasdaq fell more than 3%, with other chipmakers and data center providers also suffering sharp declines.
DeepSeek’s success has raised concerns about the long-term dominance of companies like OpenAI, which is valued at $157 billion.
Analysts say the Chinese model could force a rethink on how top AI models are developed and funded.
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Reactions in the US and China
US President Donald Trump called DeepSeek’s emergence a “wake-up call“, urging American companies to focus on maintaining technological leadership.
Meanwhile, China has embraced the model as evidence of its growing self-reliance in tech.
President Xi Jinping has made AI a national priority, reflecting Beijing’s shift from traditional manufacturing to advanced technology.
The Man Behind DeepSeek
DeepSeek was founded in December 2023 by Liang Wenfeng, a Zhejiang University graduate with a background in computer science and finance. He is also the CEO of a hedge fund called High-Flyer, which specializes in AI-driven quantitative trading.
In past interviews, Liang has argued China must move beyond imitation to true innovation in AI. He believes DeepSeek’s success is proof that Chinese companies can compete on the global stage as leaders rather than followers.
The Censorship Issue
Despite its technological advancements, DeepSeek follows China’s strict censorship laws.
When asked about politically sensitive topics, such as the 1989 Tiananmen Square massacre, the chatbot refuses to provide details. This highlights the ongoing tension between AI development and government control over information.
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The Bigger Picture
DeepSeek’s success has raised questions about Washington’s efforts to restrict China’s access to advanced technology.
The company’s ability to compete with Silicon Valley despite limited access to high-end chips signals a shift in the AI landscape.
As DeepSeek continues to reshape the industry, its rise is forcing companies and governments to rethink their strategies in the race for AI dominance.
