(Bloomberg) — Chinese startup DeepSeek’s eponymous AI assistant has rocketed to the top of Apple Inc.’s iPhone download charts, raising doubts in Silicon Valley about the strength of U.S. leadership in AI.
The app’s artificial intelligence model is widely seen as competitive with the latest from OpenAI and Meta Platforms Inc. Its claim that it costs much less to train and develop has triggered downward moves in stocks across the Asian supply chain.
Chinese technology companies linked to DeepSeek such as Iflytek Co. rose on Monday, while chipmaking toolmakers from the Netherlands’ ASML Holding NV to Advantest Corp. rose on Monday, while chipmaking toolmakers from the Netherlands’ ASML Holding NV to Advantest Corp. rose on Monday. of Japan fell due to the potential threat to demand for Nvidia Corp.’s AI accelerators. amid concerns that DeepSeek’s AI models could disrupt US technological leadership.
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Praised by investor Marc Andreessen as “one of the most incredible and impressive advances”, the DeepSeek assistant shows its work and thinking when addressing a user’s written query or request. Reviews on Apple’s app store and Alphabet Inc.’s Android Play Store praised this transparency. The app topped the chart for free downloads on iPhones in the US and is among the most downloaded productivity apps on the Play Store.
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Founded by quant fund chief Liang Wenfeng, DeepSeek’s open-source AI model is spurring a shake-up of the billions of dollars companies have been spending to stay ahead in the AI race.
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“While it remains to be seen whether DeepSeek will prove to be a viable, cheaper alternative in the long term, initial concerns center on whether the pricing power of US tech giants is being threatened and whether their massive AI spending needs to be reevaluated,” said Jun Rong Yeap of IG Asia.
Like all other Chinese-made AI models, DeepSeek self-censors on topics considered politically sensitive in China. Unlike ChatGPT, DeepSeek deflects questions about Tiananmen Square, President Xi Jinping, or the possibility of China invading Taiwan. This can be shocking for international users, who may not have come into direct contact with Chinese chatbots before.
The early success provides a counterpoint to expectations that more advanced AI will require increasing amounts of computing power and energy — an assumption that has driven shares of Nvidia and its vendors to record highs.
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DeepSeek’s exact development cost and power consumption are not fully documented, but the startup has presented numbers that suggest its cost was just a fraction of OpenAI’s latest models. The fact that a small and efficient AI model has emerged in China, which has been subject to increasing US trade sanctions over advanced Nvidia chips, is also challenging the effectiveness of such measures.
“The US is great at research and innovation and especially new advancements, but China is better at engineering,” computer scientist Kai-Fu Lee said earlier this month at the Asian Financial Forum in Hong Kong. “Nowadays, when you have limited computing power and money, you learn to build things very efficiently.”
What Bloomberg Intelligence says:
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China’s strategic ambitions in AI are expected to continue to bear fruit over the next 24 months, with the country poised to further narrow the development gap with the US despite the semiconductor supply bottleneck. China’s emerging prowess in AI is a testament to its inherent strength in software development, positioning the nation as the US’s primary challenger.
