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Chinese startup DeepSeek’s AI assistant outshined ChatGPT on Monday, becoming the top-rated free app in the US App Store.
With its DeepSeek-V3 model, which its developers claim “tops the leaderboard among open-source models and rivals the most advanced closed-source models globally,” the AI app has become a huge hit with US users since its January 10 release, according to app data research firm Sensor Tower.
Challenges to US AI Dominance
At this watershed moment, DeepSeek has shaken up Silicon Valley, casting doubt on long-held beliefs about American AI supremacy and the efficacy of export restrictions aimed at China’s cutting-edge chip and AI capabilities.
To train their models, AI systems like DeepSeek and ChatGPT necessitate high-end processors. To prevent these chips from being shipped to China and utilized to train artificial intelligence models by Chinese companies, the Biden administration has expanded the scope of sanctions since 2021.
Last month, though, researchers from DeepSeek revealed in a study that the DeepSeek-V3 trained using Nvidia’s H800 chips for less than $6 million.
U.S. tech executives are starting to question the effectiveness of tech export controls due to a combination of factors, including the use of allegedly weaker chips compared to the most advanced Nvidia products that Washington has been trying to keep out of China and the comparatively low costs of training.
Global AI Landscape
Not much information is available about DeepSeek, a small business from Hangzhou that was established in 2023. This was the same year when Baidu introduced the first Chinese AI large-language model.
Since then, a plethora of AI models have been launched by various Chinese tech companies, both big and small. However, the US tech industry has only ever complimented DeepSeek for matching or even surpassing the performance of state-of-the-art US models.
With profit-taking and IT companies taking a hit after the debut of the DeepSeek AI program last week, all three major Wall Street indexes declined on Friday. The S&P 500 slid off a record high. The company claimed that the development of the model only cost $5.6 million.
Tech giants like Nvidia, Meta, and Alphabet have poured hundreds of billions of dollars into developing artificial intelligence products, driving their valuations skyrocketing, and the arrival of the program has triggered concerns about competition.
It was also announced shortly after Trump unveiled a new $500 billion initiative to develop AI infrastructure in the US.
As the Nikkei ended in negative territory in Tokyo, IT and semiconductor firms were among the major losers. Advantest was down more than eight percent and Tokyo Electron was down over five percent.
The stock price of SoftBank, an investor in Trump’s artificial intelligence initiative, fell by about 8%.
According to Scale AI CEO Alexandr Wang, “What we’ve found is that DeepSeek… is the top performing, or roughly on par with the best American models” (CNBC, 2015).
However, Hong Kong had an increase, while Shanghai, Singapore, Wellington, Mumbai, Bangkok, and Manila all saw losses.
Following their fall from record highs on Friday, London and Frankfurt started the day on the back foot, while Paris also saw a decline.
