• US President Donald Trump said that Chinese startup DeepSeek’s technology should act as a spur for American companies and said it was good that companies in China have come up with a cheaper, faster method of artificial intelligence.

• He said that the sudden rise of the Chinese app DeepSeek should be “a wake-up call” for American companies developing artificial intelligence as they need to be laser-focused on competing to win.

What is DeepSeek?

• DeepSeek is a Hangzhou-based startup whose controlling shareholder is Liang Wenfeng, co-founder of quantitative hedge fund High-Flyer, based on Chinese corporate records.

• Hangzhou is known as “China’s Silicon Valley”.

• The firm is the child of tech and business prodigy Liang Wenfeng, born in 1985 and an engineering graduate of Hangzhou’s prestigious Zhejiang University.

• DeepSeek’s first AI model, DeepSeek Coder, was released in November 2023 as an open-source model designed for coding tasks.

• DeepSeek has won plaudits for its cost-effectiveness and praise in China for its seeming ability to navigate US sanctions that have aimed to prevent access to the high-tech chips needed to power the AI revolution.

• DeepSeek’s success has already been noticed in China’s top political circles. On January 20, the day DeepSeek-R1 was released to the public, founder Liang attended a closed-door symposium for businessmen and experts hosted by Chinese premier Li Qiang.

• Liang’s presence at the gathering is potentially a sign that DeepSeek’s success could be important to Beijing’s policy goal of overcoming Washington’s export controls and achieving self-sufficiency in strategic industries like AI.

Why has DeepSeek taken the tech world by storm?

• Chinese startup DeepSeek’s launch of its latest AI models, which it says are on a par or better than industry-leading models in the United States at a fraction of the cost, is threatening to upset the technology world order.

• The company has attracted attention in global AI circles after writing in a paper last month that the training of DeepSeek-V3 required less than $6 million worth of computing power from Nvidia H800 chips.

• DeepSeek-R1, launched last week, is 20 to 50 times more affordable to use than OpenAI’s o1 model, depending on the task, according to a post on DeepSeek’s official WeChat account.

• That garnered attention worldwide, although scepticism over DeepSeek’s cost claims lingers.

• DeepSeek’s AI chatbot, powered by DeepSeek-V3, has overtaken rival ChatGPT to become the top-rated free application available on Apple’s App Store in the United States.

• What truly rattled the industry was DeepSeek’s claim that it developed its latest model at a fraction of the cost that major companies are investing in AI development, primarily on expensive Nvidia chips and software.

• This has raised doubts about the reasoning behind some US tech companies’ decision to pledge billions of dollars in AI investment and shares of several big tech players, including Nvidia, have been hit.

• Investors sold technology stocks across the globe on January 27 over concerns the emergence of the low-cost Chinese artificial intelligence model would threaten the dominance of the current US-based AI leaders.

• Shares of Nvidia, a leader in the AI chip market, fell 17 per cent, wiping $593 billion from its market value — a record one-day loss for any company — and dragged US stocks lower.

• OpenAI CEO Sam Altman called Chinese startup DeepSeek’s R1 AI model impressive.

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