DeepSeek has shocked the AI world by overtaking ChatGPT to become the top free app on Apple’s App Store. It now holds the number one spot in the UK, US, and China.
The app has gained immense popularity since its January launch, challenging the notion that America dominates the AI space.
Low-Cost Model Shakes Industry
Powered by the open-source DeepSeek-V3 model, the app claims development costs under $6 million—far less than its rivals. Some in the AI community, however, question this claim.
After releasing DeepSeek-R1 earlier this month, the company touted performance comparable to OpenAI’s latest models. It excels in tasks like math, coding, and natural language reasoning.
Marc Andreessen, a Silicon Valley investor and Trump advisor, likened DeepSeek-R1’s release to “AI’s Sputnik moment,” referencing the Soviet Union’s satellite launch in 1957.
DeepSeek’s development has been shaped by China’s limited access to advanced chips due to US export restrictions. Chinese developers have collaborated and innovated to reduce computing requirements and costs for AI models. This approach could disrupt the AI industry by making development cheaper and more accessible.
Shares in AI-related companies such as Nvidia, Microsoft, and Meta fell following the app’s rise. European stocks, including ASML and Siemens Energy, also saw sharp declines. Analysts suggest DeepSeek’s low-cost approach raises concerns about profitability for firms heavily invested in costly AI infrastructure.
Singapore-based technology advisor Vey-Sern Ling warned that this innovation could “derail the investment case for the entire AI supply chain.” Still, Citi analysts believe American firms retain an edge due to their access to advanced chips in a restricted environment.
DeepSeek’s Founder and Vision
DeepSeek was founded in 2023 by Liang Wenfeng, a graduate of information and electronic engineering from Hangzhou, China. He previously founded a hedge fund that financed DeepSeek.
Liang reportedly stockpiled 50,000 Nvidia A100 chips before the US export ban, pairing them with cheaper chips still available for import. This strategic move allowed him to launch DeepSeek at reduced costs.
In 2024, Liang attended a meeting with Chinese Premier Li Qiang. He later expressed surprise at the attention given to his AI model’s pricing. “We were simply calculating costs and setting prices accordingly,” Liang told The China Academy.
DeepSeek’s rise highlights the potential of cost-effective AI solutions, offering a glimpse into the future of the industry.