The AI chatbot DeepSeek from China has ascended to the top of the App Store, catching US tech firms off guard.
This Chinese startup is competing effectively with OpenAI’s ChatGPT, all while incurring significantly lower development costs, impacting the market valuations of major AI companies in the United States…
According to Bloomberg.
The AI assistant DeepSeek, developed by a Chinese startup, has soared to the forefront of Apple Inc.’s iPhone download charts, raising concerns in Silicon Valley about the stability of America’s lead in AI technology.
The artificial intelligence model behind the app is seen as competitive with those of OpenAI and Meta Platforms Inc. Its assertion of having a much lower training and development cost has caused significant stock movements across Asia’s supply chains.
User reviews commend DeepSeek for its comparable performance to ChatGPT’s pro version, highlighting its transparency in showing its work, which instills greater trust in its outputs. We previously identified this app as one to monitor closely.
‘Creating ripples across Silicon Valley’
VentureBeat reflects that AI professionals are indicating that DeepSeek is genuinely competitive with leading US models.
The unexpected emergence of DeepSeek-R1 as a high-performance contender has sent waves of concern through Silicon Valley, according to discussions with various tech engineers, thinkers, and industry leaders.
Web entrepreneur Arnaud Bertrand emphasized the profound implications of DeepSeek’s success on X, stating, “This fundamentally alters the landscape. Its success also highlights the flaws in the US’s strategies to hinder China’s technological growth, which ironically may have facilitated DeepSeek’s innovations (as the saying goes, necessity drives invention).”
DeepSeek Leverages Advanced Software Over Hardware
Generative AI models typically rely on Nvidia GPUs, with top chatbots from companies like OpenAI, Google, and Anthropic utilizing over half a million of these units. Due to US export restrictions on this advanced technology, DeepSeek has only been able to access around 50,000 GPUs, yet it is achieving similar results with just 10% of the processing capability.
Wired highlights that this limitation compelled the Chinese firm to prioritize software development.
“Unlike many Chinese AI companies that depend heavily on access to sophisticated hardware, DeepSeek has concentrated on optimizing software resources,” said Marina Zhang, an associate professor at the University of Technology Sydney, who researches Chinese innovations. “By adopting open-source methodologies, DeepSeek fosters collaborative innovation which not only alleviates resource constraints but also speeds up the creation of advanced technologies, allowing it to stand out from more closed-off competitors.”
Resulted in a Tumultuous Day for US Tech Shares
The Financial Times reports that US technology stocks faced considerable losses.
The aftermath sent shockwaves through the markets on Monday, with Nvidia projected to lose over $300 billion in market value—the largest single decline ever recorded for any company—as investors reevaluated prospects for future investments in AI hardware.
European chip-making giant ASML dropped by 10%, while Microsoft declined by 6% and Meta experienced a 5% fall. Stock futures suggested a 4.2% drop for the tech-heavy Nasdaq, with the S&P 500 index set for a 2.4% decline.
Image: DMN collated images from the App Store and Scott Webb on Unsplash
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