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Chinese artificial intelligence (AI) app DeepSeek has overtaken ChatGPT and other competitors to become the top-rated free app on Apple’s App Store in the US, UK and China.
The app has gained popularity since its launch in January, challenging the widespread belief that America is the untouchable leader of the AI industry.
It’s powered by the open-source DeepSeek-V3 model, which its researchers say was developed for less than $6 million — significantly less than the billions spent by competitors.
But that claim has been disputed by others in the AI space.
After the DeepSeek-R1 was released earlier this month boasted by the company “performance on par with” one of ChatGPT’s maker’s latest OpenAI models – when used for tasks such as math, coding and natural language reasoning.
Silicon Valley venture capitalist and Donald Trump adviser Marc Andreessen described DeepSeek-R1 as “Sputnik’s AI Moment”in reference to the first artificial Earth satellite launched by the Soviet Union in 1957.
Advanced chips power the training of AI models such as ChatGPT and DeepSeek.
But from 2021 the US government has expanded its restrictions on advanced chips being sold to China.
To continue their work without constant supplies of imported advanced chips, Chinese AI developers have shared their work with each other and experimented with new approaches to the technology.
This has resulted in AI models that require much less computing power than before. It also means they cost far less than previously thought possible, which has the potential to turn the industry upside down.
Shares in US-based AI-related companies such as Nvidia, Microsoft and Meta fell on Monday morning – and the development knocked European share prices down.
ASML, the Dutch maker of chip equipment, saw its share price drop more than 10%, while shares of Siemens Energy, which makes AI-related hardware, tumbled 21%.
“This idea of a cheap Chinese version is not necessarily mainstream, so it surprised the market a little bit,” said Fiona Cincotta, senior market analyst at City Index.
“So if you suddenly get this low-cost AI model, it’s going to raise concerns about competitors’ profits, especially given the amount they’ve already invested in more expensive AI infrastructure.”
And Singapore-based tech equity adviser Wei-Sern Ling told the BBC it could “potentially undermine the investment case for the entire AI supply chain”.
But Wall Street banking giant Citi warned that while DeepSeek could challenge the dominance of US companies such as OpenAI, the problems facing Chinese firms could hinder their development.
“We appreciate that in an inevitably more restrictive environment, US access to more advanced chips is an advantage,” its analysts said in a report.
Last week, a consortium of American technology firms and foreign investors announced The Stargate Project, a company that is putting $500 billion into AI infrastructure in Texas.
The company was founded in 2023. by Liang Wenfeng in Hangzhou, a city in Southeast China.
The 40-year-old, an information and electronics engineering graduate, also founded the hedge fund that backs DeepSeek.
he it is reported built a shop for Nvida A100 chips, now banned for export in China. Experts believe that this collection – which some estimates number 50,000 – led him to launch DeepSeek, pairing these chips with cheaper, lower-end chips still available for import.
Mr. Liang was recently seen at a meeting between industry experts and Chinese Premier Li Qiang.
In a July 2024 interview. with The Chinese AcademyMr. Liang said he was surprised by the reaction to the previous version of his AI model.
“We didn’t expect pricing to be such a sensitive issue,” he said.
“We just went at our own pace, calculated costs and set prices accordingly.”
Additional reporting by Joao Da Silva and Dearbyle Jordan.
