Chinese artificial intelligence (AI) app DeepSeek has overtaken ChatGPT and other competitors to become the highest-rated free app on Apple’s App Store in the US, UK and China.
The app has grown in popularity since its launch in January, challenging the widely held 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 its competitors.
But this claim has been disputed by others in the AI field.
Following the launch of DeepSeek-R1 earlier this month, the company boasted “performance comparable to” one of the latest models from ChatGPT maker OpenAI when used for tasks like such as mathematics, coding and natural language reasoning.
Marc Andreessen, a Silicon Valley venture capitalist and advisor to Donald Trump, described DeepSeek-R1 as “AI’s Sputnik moment,” referring to the first artificial Earth satellite launched by the Soviet Union in 1957.
Advanced chips power the training of AI models like ChatGPT and DeepSeek.
But since 2021, the US government has expanded its restrictions on advanced chips sold to China.
In order to continue their work without a steady supply of imported advanced chips, Chinese AI developers have been sharing their work and experimenting with new technological approaches.
This has resulted in AI models that require much less computing power than before. It also means they cost a lot less than previously thought, which could potentially shake up the industry.
Shares of U.S.-based AI-related companies such as Nvidia, Microsoft and Meta were down Monday morning.
Some estimates put the cost of DeepSeek training at just a fraction of that of major U.S. AI companies.
“This has the potential to derail investments across the entire AI supply chain, which are driven by high spending by a small handful of hyperscalers,” said Vey-Sern Ling, an equity advisor. technology based in Singapore, at the BBC.
But Wall Street banking giant Citi has warned that while DeepSeek could challenge the dominant positions of U.S. companies, just like OpenAI, problems faced by Chinese companies could hamper their development.
“We believe that in an inevitably more restrictive environment, U.S. access to more advanced chips is an advantage,” its analysts said in a report.
Last week, a consortium of American technology companies and foreign investors announced Project Stargate, a venture investing $500 billion in AI infrastructure in Texas.
The company was founded in 2023 by Liang Wenfeng in Hangzhou, a city in southeastern China.
The 40-year-old, with degrees in information and electronics engineering, also founded the hedge fund that backed DeepSeek.
He would have set up a store of Nvida A100 chips, now banned from exporting to China. Experts estimate that this collection – which some estimates put at 50,000 – led him to launch DeepSeek, combining these chips with cheaper, low-end chips still available for import.
Mr. Liang was recently seen at a meeting between industry experts and Chinese Premier Li Qiang.
