Beijing, Jan 29: A frenzy over an artificial intelligence chatbot made by Chinese tech startup DeepSeek was upending stock markets Monday and fuelling debates over the economic and geopolitical competition between the US and China in developing AI technology.DeepSeek’s AI assistant became the No. 1 downloaded free app on Apple’s iPhone store Monday, propelled by curiosity about the ChatGPT competitor.
Part of what’s worrying some US tech industry observers is the idea that the Chinese startup has caught up with the American companies at the forefront of generative AI at a fraction of the cost.
That, if true, calls into question the huge amounts of money US tech companies say they plan to spend on the data centres and computer chips needed to power further AI advancements.
But hype and misconceptions about DeepSeek’s technological advancements also sowed confusion.
“The models they built are fantastic, but they aren’t miracles either,” said Bernstein analyst Stacy Rasgon, who follows the semiconductor industry and was one of several stock analysts describing Wall Street’s reaction as overblown.
“They’re not using any innovations that are unknown or secret or anything like that,” Rasgon said. “These are things that everybody’s experimenting with.”
What is DeepSeek?
The startup DeepSeek was founded in 2023 in Hangzhou, China and released its first AI large language model later that year. Its CEO Liang Wenfeng previously co-founded one of China’s top hedge funds, High-Flyer, which focuses on AI-driven quantitative trading.
DeepSeek began attracting more attention in the AI industry last month when it released a new AI model that it boasted was on par with similar models from US companies such as ChatGPT maker OpenAI, and was more cost-effective in its use of expensive Nvidia chips to train the system on huge troves of data.
The chatbot became more widely accessible when it appeared on Apple and Google app stores early this year.
But it was a follow-up research paper published last week — on the same day as President Donald Trump’s inauguration — that set in motion the panic that followed.
That paper was about another DeepSeek AI model called R1 that showed advanced “reasoning” skills — such as the ability to rethink its approach to a math problem — and was significantly cheaper than a similar model sold by OpenAI called o1.
Behind the drama over DeepSeek’s technical capabilities is a debate within the US over how best to compete with China on AI.
“Deepseek R1 is AI’s Sputnik moment,” said venture capitalist Marc Andreessen in a Sunday post on social platform X, referencing the 1957 satellite launch that set off a Cold War space exploration race between the Soviet Union and the US.
Andreessen, who has advised Trump on tech policy, has warned that over regulation of the AI industry by the US government will hinder American companies and enable China to get ahead.