What is DeepSeek and why has it shaken the AI sector? 
2025-01-28
Category: economic

An AI-powered chatbot by the Chinese company DeepSeek has quickly become the most downloaded free app on Apple's store, following its January release in the US.The app's sudden popularity, as well as DeepSeek's reportedly low costs compared to those of US-based AI companies, have thrown financial markets into a spin.Silicon Valley venture capitalist Marc Andreessen has hailed DeepSeek as "one of the most amazing and impressive breakthroughs" in AI.The company says its latest AI models are on par with industry-leading models in the US - like ChatGPT - at a fraction of the cost. Researchers behind the app have said it only took $6m (£4.8m) to build it, much less than the billions spent by AI companies in the US.
What is DeepSeek? 
DeepSeek is a Chinese artificial intelligence company founded in Hangzhou, a city in southeastern China.The company was launched in July 2023 by Liang Wenfeng and funded by the Chinese entrepreneur's hedge fund. It was released in the US on 10 January, according to Sensor Tower. Wenfeng reportedly built up a store of Nvidia A100 chips - which some estimates put at 50,000 - which are now banned from export to China. Experts believe this collection enabled him to launch DeepSeek, by pairing the powerful chips with cheaper, lower-end ones that are still available to import.
Who is using it? 
The company's AI app is available for download in Apple's App Store and online at its website. The service, which is free, has quickly become the top downloaded app on Apple's store, although there have been some reports of people having trouble signing up.It has also become the top-rated free application in the US on Apple's app store. 
What does the app do? 
DeepSeek has become popular for its powerful AI assistant which operates similarly to ChatGPT. According to its description on the App Store, it is designed "to answer your questions and enhance your life efficiently". Comments left by users rating the app say "it gives the writing more personality". 
DeepSeek's low cost creates concern for America's AI future
DeepSeek was reportedly developed for a fraction of the cost of its rivals, raising questions about the future of America's AI dominance and the scale of investments US firms are planning.The company behind ChatGPT - OpenAI - has been a global leader in the burgeoning field and Nvidia has become one of the highest valued companies in the world, when measured by market capitalization. OpenAI CEO Sam Altman joined financial and other firms at a White House event last week, where they pledged to invest $500bn (£400bn) in building AI infrastructure in the US.There are no firm reports on how much it cost to build ChatGPT, but based on reporting from The Information, many people believe it took $540mn, nearly 100 times the cost of DeepSeek.DeepSeek's possibly lower costs roiled financial markets on 27 January, leading the tech-heavy Nasdaq to fall more than 3%. Nvidia was down more than 12% on the morning of 27 January. Microsoft lost roughly 4% percent, and Oracle dipped more than 7%. 