A Chinese artificial intelligence (AI) model named DeepSeek has skyrocketed to the top of Apple Store downloads, shocking investors and shaking up the tech industry.
Released on January 20, DeepSeek quickly impressed AI experts and caught global attention. U.S. President Donald Trump called it a “wake-up call” for American companies to compete more aggressively.
This chinese AI claims to have been built at a fraction of the cost of leading AI models like OpenAI’s ChatGPT, using fewer high-end chips and significantly reducing production costs. This revelation sent shockwaves through the stock market, causing chip giant Nvidia to lose nearly $600 billion in market value—the largest single-day loss in U.S. history.
DeepSeek’s rise also raises questions about Washington’s efforts to curb China’s technological advancements, particularly through restrictions on exporting advanced chips. Despite these barriers, Chinese President Xi Jinping has prioritized AI, fueling rapid developments in the sector.
DeepSeek’s Capabilities and Censorship
DeepSeek functions similarly to ChatGPT, assisting with tasks such as answering questions, summarizing texts, and coding. Reports suggest it rivals OpenAI’s GPT-4 in areas like mathematics and programming. However, like other Chinese AI models, this AI avoids politically sensitive topics. When asked about the Tiananmen Square events, it refused to answer—a reflection of government-imposed censorship, which remains a challenge for China’s AI ambitions globally.
Despite this, DeepSeek’s developers claim it was built at an unprecedentedly low cost—just $6 million compared to OpenAI’s estimated $100 million for GPT-4. Reports indicate that its founder stockpiled Nvidia A100 chips before U.S. export restrictions took effect, allowing DeepSeek to develop a competitive AI model.
Who Is Behind this chinese AI?
DeepSeek was founded in December 2023 by Liang Wenfeng, a graduate of Zhejiang University with a background in electronic engineering and computer science. Unlike many Silicon Valley AI entrepreneurs, Liang also has experience in finance and is CEO of High-Flyer, a hedge fund that applies AI-driven trading strategies.
In 2019, High-Flyer became China’s first quant fund to raise over 100 billion yuan ($13 billion). Liang has stated that China’s AI sector “cannot remain a follower forever” and has pushed for greater innovation rather than imitation.
This success challenges the assumption that AI breakthroughs require massive budgets and high-end chips, triggering uncertainty about future semiconductor demand.
Financial markets reacted strongly to DeepSeek’s rise. On January 27, the Nasdaq dropped over 3%, with global chip manufacturers and data center stocks seeing a sharp decline. Nvidia lost 17% of its stock value before rebounding 4% the next day.
China’s Celebration and the Road Ahead
DeepSeek’s rise is seen as a major victory for China’s push toward technological self-sufficiency. While the Chinese Communist Party has yet to comment, state media highlighted how Silicon Valley and Wall Street were “losing sleep” over DeepSeek’s impact.
As the AI race heats up, DeepSeek signals that China is no longer just a follower but a formidable competitor on the global stage.
