Chinese AI App ‘DeepSeek’ Shakes Up Global Tech Market, Sending Shockwaves Through US and European Companies

Islamabad:China’s artificial intelligence (AI) app ‘DeepSeek’ has caused a major stir in the global tech market, with US and European investors now fearing the impact of its sudden rise. The app, which launched a chatbot last week, has rapidly become the most downloaded free app in the United States, shocking major AI players like Nvidia, Microsoft, and Google.

DeepSeek’s chatbot was reportedly created at a fraction of the cost compared to its competitors, with some claiming it was developed for as little as $6 million. In comparison, rival companies have spent billions to develop similar AI models. This significant price difference has raised serious questions about the future of AI infrastructure, particularly in the US, where major tech firms had promised to invest $500 billion in AI development.

As a result, Nvidia, a leading AI chip manufacturer, saw its stock price drop by 16.9% on Monday, while other companies like Broadcom, Microsoft, and Alphabet (Google’s parent company) also saw declines in their shares. In Europe, chipmaker ASML’s shares fell by more than 7%.

DeepSeek’s success is notable not only because of its low cost but also because it launched at a time when the US has placed restrictions on the sale of advanced AI chips to China. Despite these restrictions, Chinese developers have shared technology and experimented with new, cost-effective methods, leading to AI models that require significantly less computing power and, consequently, cost much less to develop.

Following its launch, DeepSeek proudly announced that its model outperformed some of OpenAI’s latest models in tasks like mathematics, coding, and natural language reasoning. The app’s rapid rise has caught the tech world off guard, with analysts suggesting it could challenge the dominance of US companies in AI.

DeepSeek was founded in 2023 in Hangzhou, China, by Liang Wenfeng, a 40-year-old electronic engineering graduate and founder of the hedge fund supporting the project. Liang’s company reportedly used Nvidia’s A100 chips to create DeepSeek, which are now banned for export to China, combining them with lower-grade chips that are still available for import.

Despite the app’s success, DeepSeek has faced cyberattacks and temporarily restricted new user registrations to ensure the stability of its services.

Analysts have noted that while DeepSeek’s rise may threaten the dominance of US-based companies like OpenAI, the Chinese company’s challenges—such as regulatory restrictions—could hinder its future growth. Nonetheless, the rise of DeepSeek highlights the growing competition in the AI field and raises questions about the future landscape of AI technology and investment.