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LAST UPDATE | 28 Jan
CHINESE FIRM DEEPSEEK’S artificial intelligence chatbot has soared to the top of the Apple Store’s and Google Play’s download charts, displacing market leader ChatGPT.
It’s a move that has stunned industry insiders and analysts with its ability to match its US competitors.
The programme has shaken up the tech industry and hit US titans including Nvidia, the AI chip juggernaut, that saw nearly $600 billion of its market value erased, the most ever for one day on Wall Street.
Overall, more than $1 trillion was wiped off the value of US tech stocks.
DeepSeek was developed by a start-up based in the eastern Chinese city of Hangzhou, known for its high density of tech firms.
Available as an app or on desktop, DeepSeek can do many of the things that its Western competitors can do – write song lyrics, help work on a personal development plan, or even write a recipe for dinner based on what’s in the fridge.
It can communicate in multiple languages, though it is strongest in English and Chinese.
However, it is subject to many of the limitations seen in other Chinese-made chatbots – asked about leader Xi Jinping or Beijing’s policies in the western region of Xinjiang, it implored the user to “talk about something else”.
“I am an AI assistant designed to provide helpful and harmless responses,” it explained.
But from writing complex code to solving difficult sums, industry insiders have been astonished by just how well DeepSeek’s abilities match the competition.
“What we’ve found is that DeepSeek… is the top performing, or roughly on par with the best American models,” Alexandr Wang, CEO of Scale AI, told CNBC.
That’s all the more surprising given what is known about how it was made.
In a paper detailing its development, the firm said the model was trained using only a fraction of the chips used by its Western competitors.
Analysts had long thought that the United States’ critical advantage over China when it comes to producing high-powered chips – and its ability to prevent the Asian power from accessing the technology – would give it the edge in the AI race.
But DeepSeek researchers said they spent only $5.6 million (€5.4m) developing the latest iteration of their model – peanuts when compared with the billions US tech giants have poured into AI, primarily on expensive Nvidia chips and software.
The development is significant given the AI boom, ignited by ChatGPT’s release in late 2022, which propelled Nvidia to become one of the world’s most valuable companies.
Just published: front page of the Financial Times, UK edition, Tuesday 29 January https://t.co/ZYXv0Gvxl4 pic.twitter.com/cOdcUSnDXQ
— Financial Times (@FT) January 27, 2025
But shares in major tech firms in the United States and Japan tumbled as the industry takes stock of the challenge from DeepSeek.
Chip making giant Nvidia – the world’s dominant supplier of AI hardware and software – closed down 17% on Wall Street yesterday.
And Japanese firm SoftBank, a key investor in US President Donald Trump’s announcement of a new $500 billion venture to build infrastructure for artificial intelligence in the United States, fell almost 6% after dropping 8.3% yesterday.
Venture capitalist Marc Andreessen, a close advisor to Trump, described it as “AI’s Sputnik moment” – a reference to the Soviet satellite launch that sparked the Cold War space race.
“DeepSeek R1 is one of the most amazing and impressive breakthroughs I’ve ever seen,” he wrote on X.
US President Donald Trump said DeepSeek was a “wake up call” for US firms, after its emergence caused a rout in tech shares.
“Hopefully, the release of DeepSeek AI from a Chinese company should be a wake up call for our industries that we need to be laser-focused on competing to win,” Trump told a Republican congressional retreat in Miami yesterday.
But Trump said the shock could also be “positive” for Silicon Valley by forcing it to innovate more cheaply.
“I would say that could be a positive,” Trump said. “So instead of spending billions and billions, you’ll spend less, and you’ll come up with hopefully the same solution.”
Like its Western competitors Chat-GPT and Meta’s Llama, DeepSeek uses a large-language model (LLM) – massive quantities of texts to train its everyday language use.
But unlike Silicon Valley rivals, which have developed proprietary LLMs, DeepSeek is open source, meaning anyone can access the app’s code, see how it works and modify it themselves.
“We are living in a timeline where a non-US company is keeping the original mission of OpenAI alive – truly open, frontier research that empowers all,” Jim Fan, a senior research manager at Nvidia, wrote on X.
OpenAI is behind Chat-GPT and its chief executive Sam Altman has praised the recent debut of DeepSeek’s AI model, saying it was “invigorating to have a new competitor.”
deepseek's r1 is an impressive model, particularly around what they're able to deliver for the price.
— Sam Altman (@sama) January 28, 2025
we will obviously deliver much better models and also it's legit invigorating to have a new competitor! we will pull up some releases.
In a social media post, Altman called DeepSeek’s R1 “an impressive model, particularly around what they’re able to deliver for the price.”
DeepSeek said it “tops the leaderboard among open-source models” – and “rivals the most advanced closed-source models globally”.
Beijing’s leadership has vowed to be the world leader in AI technology by 2030 and is projected to spend tens of billions in support for the industry over the next few years.
And the success of DeepSeek suggests that Chinese firms may have begun leaping the hurdles placed in their way.
Last week DeepSeek’s founder, hedge fund manager Liang Wenfeng, sat alongside other entrepreneurs at a symposium with Chinese Premier Li Qiang – highlighting the firm’s rapid rise.
Fianna Fáil TD Malcolm Byrne has said Irish citizens and businesses “need to be careful if they decide to use Deepseek”.
He voiced concerns that any data shared with the app will be stored on servers based in China.
“If our data is stored in Ireland or other parts of the European Union, there are strong safeguards in place as to how that data will be used,” said Byrne.
“If data is stored in China, those safeguards does not exist.
“The Chinese Communist Party can use its National Security Law to access this data.
“Deepseek’s privacy policy provides that any personal information gathered through using its product may be stored on servers based in China.”
Byrne added that “the potential for misuse of the technology and of data collected is huge”.
He said it’s important for the Government to have a clear strategy on AI use and called for a special Oireachtas Committee on AI and for a programme of education on AI and Technology to be rolled out across the public service, as well as for TDs and Senators.
Meanwhile, Australia’s science minister Ed Husic aised privacy concerns over DeepSeek, urging users to think carefully before downloading it.
“There are a lot of questions that will need to be answered in time on quality, consumer preferences, data and privacy management,” Husic told national broadcaster ABC.
“I would be very careful about that. These type of issues need to be weighed up carefully.”
Husic said Chinese companies sometimes differed from Western rivals when it came to user privacy and data management.
“The Chinese are very good at developing products that work very well. That market is accustomed to their approaches on data and privacy.
“The minute you export it to markets where consumers have different expectations around privacy and data management, the questions is whether those products will be embraced in the same way.
“I think you have to be careful, I’m just being completely frank and direct on that.”
Australia in 2018 banned Chinese telecommunications giant Huawei from its national 5G network, citing national security concerns.
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