Chinese artificial intelligence (AI) app DeepSeek AI has officially overtaken ChatGPT as the top-rated free app on Apple’s App Store. This has sparked a sell-off of shares in major tech companies worldwide.
On Monday evening, the BBC reported that Nvidia, Microsoft, and Meta opened down their shares as DeepSeek’s surging popularity knocked down European share prices.
The app has grown in popularity since its launch, challenging the widely held belief that the US is the unassailable leader in AI and prompting questions about the scale of investments US firms are planning.
It is powered by the open-source DeepSeek-V3 model, which its researchers claim was developed for less than $6m – significantly less than the billions spent by rivals.
DeepSeek’s emergence comes as the US is restricting the sale of the advanced chip technology that powers AI to China.
To continue their work without steady supplies of imported advanced chips, Chinese AI developers have shared their work with each other and experimented with new approaches to the technology.
This has resulted in AI models that require far less computing power than before. It also means that they cost a lot less than previously thought possible, which has the potential to upend the industry.
After DeepSeek-R1 was launched earlier this month, the company boasted of “performance on par with” one of ChatGPT maker OpenAI’s latest models – when used for tasks such as maths, coding and natural language reasoning.
Silicon Valley venture capitalist and Donald Trump advisor Marc Andreessen described DeepSeek-R1 as “AI’s Sputnik moment”, a reference to the satellite launched by the Soviet Union in 1957.
At the time, the US was considered to have been caught off-guard by their rival’s technological achievement.
DeepSeek’s popularity has startled markets. ASML, the Dutch chip equipment maker, saw its share price tumble by more than 10% while shares in Siemens Energy, which makes hardware related to AI, plunged by 21%.
Who Founded DeepSeek AI?
DeepSeek AI was founded in 2023 by Liang Wenfeng in Hangzhou, a city in southeastern China.
The 40-year-old, an information and electronic engineering graduate, also founded the hedge fund that backed DeepSeek.
He reportedly built up a store of Nvidia A100 chips, now banned from export to China. Experts believe this collection – which some estimates put at 50,000 – led him to launch DeepSeek, by pairing these chips with cheaper, lower-end ones that are still available to import.
Mr Liang was recently seen at a meeting between industry experts and the Chinese premier Li Qiang.
The milestone highlights how DeepSeek has left a deep impression on Silicon Valley, upending widely held views about U.S. primacy in AI and the effectiveness of Washington’s export controls targeting China’s advanced chip and AI capabilities.
AI models from ChatGPT to DeepSeek require advanced chips to power their training. The Biden administration has since 2021 widened the scope of bans designed to stop these chips from being exported to China and used to train Chinese firms’ AI models.
Powered by the DeepSeek-V3 model, which its creators say “tops the leaderboard among open-source models and rivals the most advanced closed-source models globally”, the artificial intelligence application has surged in popularity among U.S. users since it was released on Jan. 10, according to app data research firm Sensor Tower.
The company says, “at DeepSeek AI, we’re dedicated to pushing the boundaries of artificial intelligence to create solutions that empower businesses and enhance human capabilities. Our mission is to make advanced AI technology accessible, ethical, and impactful.”
It remains to be seen how major US tech companies react to this development. US tech companies consider themselves leaders in this field.
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