DeepSeek is a Chinese artificial intelligence app that has rocketed to the top as the highest-rated free application on Apple’s App Store in the US, UK, and China, beating ChatGPT and others. Its sudden rise has marked a selloff in shares of US-based AI companies, with stocks of Nvidia, Microsoft, and Meta falling on Monday and denting European markets.
Since DeepSeek’s release, it has called into question the notion of whether the US is leading in AI uncontested and how much American firms will actually invest in the technology. The app runs on the open-source DeepSeek-V3 model, which its developers say it created for less than $6 million—versus the billions of dollars invested by its rivals. But that claim has been viewed skeptically by others in the AI community.
The arrival of DeepSeek comes at a time when the US has clamped curbs on the sale of advanced chip technology to China. Chinese AI developers have joined forces and made innovations-creating models requiring a lot less computing power and cost-promising to disrupt the industry.
Following the recent launch of DeepSeek-R1, the company boasted of performance comparable to that of OpenAI’s latest models in tasks such as math, coding, and natural language reasoning. Venture capitalist Marc Andreessen, from Silicon Valley, called DeepSeek-R1 “AI’s Sputnik moment,” comparing it to the 1957 launch of the Soviet satellite that had caught the US off guard.
The unexpected popularity of the app has rattled markets: the shares of ASML, a Dutch chip equipment maker, fell by more than 10%, while Siemens Energy, which is involved in AI-related hardware, plunged 21%. According to market analysts, this new low-cost Chinese AI model will seriously challenge established competitors, especially in terms of profitability.
But Wall Street firm Citi warned that may become a drag on their growth. In a report, analysts said access to advanced chips remains one of the key advantages for US firms.
DeepSeek was founded in 2023 by Liang Wenfeng and is based in Hangzhou, China. According to reports, Liang, an information and electronic engineering alumnus, had stockpiled Nvidia A100 chips that are now prohibited from being exported to China. He has combined these-estimated to be some 50,000 chips-with more lowly rated chips still allowed to be imported to create DeepSeek. More recently, Liang attended a meeting of industry executives and Chinese Premier Li Qiang, where the importance of the app in today’s technological environment was discussed.
