In January 2025, Chinese AI startup DeepSeek made headlines with the release of its AI assistant app, which quickly became the most downloaded free app on Apple’s App Store in the United States, surpassing established competitors like ChatGPT.
Founded in 2023 by entrepreneur Liang Wenfeng, DeepSeek developed the R1 model, an AI system that rivals OpenAI’s offerings in reasoning capabilities but is significantly more cost-effective. The company’s approach involved training their models on less advanced Nvidia chips, challenging the prevailing notion that only large-scale training with powerful chips can lead to high-performing AI.
The app offers three main functions: answering questions, a search mode for internet-based responses, and “DeepThink” mode, which provides step-by-step reasoning abilities. Despite its impressive performance, DeepSeek’s AI assistant has faced criticism for its responses to sensitive topics, such as human rights issues and Taiwan’s sovereignty, reflecting Chinese government censorship.
The rapid ascent of DeepSeek’s app has had significant market implications. Major tech stocks, including Nvidia, Qualcomm, and Intel, experienced notable declines, with Nvidia losing over $460 billion in market capitalization—the largest in U.S. stock market history. This development has prompted discussions about the future of AI development costs and the competitive landscape between Chinese and Western AI companies.
However, DeepSeek is also facing challenges, including accusations of censorship and a large-scale cyberattack that has limited new registrations. Access to DeepSeek’s services is currently restricted to email, Google, or phone numbers from mainland China.
In summary, DeepSeek’s emergence has disrupted the AI industry, showcasing China’s rapid advancements in AI technology and challenging the dominance of established Western companies. As the landscape evolves, stakeholders worldwide are closely monitoring the implications of this shift.
