In a stunning turn of events, DeepSeek, a Chinese-made artificial intelligence (AI) model, has become the most downloaded free app on the Apple Store, sending shockwaves across global markets and toppling tech stocks. Released on January 20, 2025, this AI-powered chatbot quickly garnered attention from experts and tech enthusiasts alike, as well as international investors. Its rapid success has drawn comparisons to industry giants like OpenAI’s ChatGPT, but with a unique edge that has tech experts rethinking the future of AI development.
What is Artificial Intelligence (AI)?
Artificial Intelligence (AI) refers to the ability of machines to perform tasks that would typically require human intelligence. AI can mimic human-like conversations, solve problems, and even predict patterns, such as shopping habits, by processing and analyzing massive datasets. In recent years, AI-powered systems, such as ChatGPT and DeepSeek, have emerged as the driving force behind chatbot technologies and other generative AI applications. These tools create new content by learning from large volumes of data, including text and images. However, concerns around AI perpetuating biases or generating falsehoods continue to challenge its widespread use.
DeepSeek: A Game-Changer in AI Technology
DeepSeek, a free AI chatbot developed in China, mirrors the functionality of ChatGPT in many ways, handling tasks like answering questions, summarizing text, coding, and even assisting with mathematics. The model is said to rival OpenAI’s o1 model, which was released in late 2024, especially when it comes to performing complex tasks such as reasoning and coding.
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What sets DeepSeek apart, however, is its approach to cost efficiency. The company claims it was able to build its AI at a fraction of the cost of OpenAI’s offerings. DeepSeek’s model is powered by a unique combination of cheaper chips, including older Nvidia A100 chips, that drastically reduce the cost of performing tasks. Researchers behind DeepSeek claim their model was trained for just $6 million, compared to OpenAI’s rumored $100 million investment in GPT-4.
Moreover, DeepSeek uses fewer advanced chips, which has raised eyebrows in the tech community. Nvidia, the chip-making giant, suffered a massive $600 billion loss in market value after DeepSeek’s rise, marking one of the largest single-day losses in U.S. stock market history.
The Censorship Dilemma
Like many Chinese-developed AI models, DeepSeek has been designed to adhere to China’s strict censorship guidelines. The AI refrains from discussing politically sensitive topics. For example, when asked about the Tiananmen Square incident of 1989, DeepSeek responded with: “I am sorry, I cannot answer that question. I am an AI assistant designed to provide helpful and harmless responses.”
This censorship element is a challenge for DeepSeek’s global aspirations, especially as the AI model seeks to compete with other international players in the space. Critics argue that political controls might limit the AI’s potential to flourish in markets outside China.
DeepSeek’s Founder: Liang Wenfeng
Liang Wenfeng, the founder of DeepSeek, is not your typical tech entrepreneur. A graduate of Zhejiang University in China, Liang also has a background in finance. Before venturing into the AI space, he led a successful hedge fund called High-Flyer, which uses AI for quantitative trading. Under his leadership, High-Flyer became the first quant hedge fund in China to raise over 100 billion yuan ($13 million) in 2019.
Liang’s decision to enter the AI race is driven by a belief that China’s AI sector should not remain a follower. He has voiced his ambitions to bring China to the forefront of technological innovation, positioning DeepSeek as an innovator, rather than just a copycat of U.S. companies. In fact, DeepSeek’s success in Silicon Valley has shocked many industry insiders who never expected a Chinese company to disrupt the field with such innovation.
DeepSeek’s Impact on Global Markets
The arrival of DeepSeek has sparked significant unease among U.S. tech giants, particularly Nvidia. Nvidia’s stock plummeted 17% on January 27, 2025, after DeepSeek’s success undermined the notion that high-performance chips and large budgets were the only keys to advancing AI.
DeepSeek’s cost-effective approach has forced investors to rethink the future of AI innovation and the role of traditional chipmakers like Nvidia. Wei Sun, an AI analyst at Counterpoint Research, noted, “DeepSeek has proven that cutting-edge AI models can be developed with limited compute resources, challenging the need for expensive hardware like Nvidia’s chips.”
The rapid rise of DeepSeek also raises questions about the U.S. government’s efforts to limit China’s technological ambitions. The U.S. had imposed a ban on the export of advanced chips to China, hoping to stymie its AI development. However, DeepSeek’s success illustrates how China’s AI startups are finding creative ways to circumvent these restrictions, highlighting the ongoing rivalry between the two superpowers in the race for technological supremacy.
Celebrating China’s AI Progress
DeepSeek’s success is seen as a symbol of China’s growing technological self-reliance. In contrast to previous generations of Chinese tech companies, which often relied on imitation, DeepSeek represents a new wave of homegrown innovation driven by young entrepreneurs eager to reshape the global tech landscape. The Chinese government has yet to officially comment on DeepSeek’s success, but state media has been quick to highlight the app’s rise, pointing out that major Silicon Valley companies and Wall Street giants are now struggling to keep up with China’s advancements in AI.
President Xi Jinping has made AI a top priority for China, and DeepSeek is just one example of how Chinese tech startups are beginning to take on international competitors in areas such as artificial intelligence, electric vehicles, and semiconductors.
The Road Ahead for DeepSeek
While DeepSeek has certainly made waves, questions about its security and data privacy remain unanswered. Australia’s science minister, Ed Husic, has voiced concerns about the app’s quality, consumer data management, and overall security. As DeepSeek continues to expand its reach internationally, it will need to address these issues to gain trust and acceptance in global markets.
Despite these challenges, the company’s success represents a major milestone for China’s tech ambitions. DeepSeek could signal the beginning of a new era in AI development, one where cost-effective innovation can disrupt the dominance of established players and bring new players into the fold.
Conclusion: A New Era of AI Competition
As DeepSeek continues to rise, it underscores a pivotal moment in the AI industry. With the ability to challenge entrenched American companies and prove that innovation doesn’t always require massive investments in high-end hardware, DeepSeek is positioning itself as a true competitor in the global AI race. The AI landscape is shifting, and DeepSeek’s success is a testament to the growing capabilities of Chinese tech in the ever-evolving world of artificial intelligence.
