The artificial intelligence (AI) model DeepSeek, developed in China, has recently become a global sensation. Its popularity surged so rapidly that it became one of the most downloaded apps on the Apple Store. DeepSeek has not only disrupted the AI industry but also impacted global financial markets. Its rise led to a significant decline in the stock prices of major tech companies, causing billions of dollars in losses for firms like Nvidia.
One of DeepSeek’s most remarkable features is that it was developed at a low cost, yet it is being compared to cutting-edge AI models like OpenAI’s GPT-4. Its success has shaken the American tech industry, prompting former U.S. President Donald Trump to call it a “warning” for American companies, urging them to focus on “winning the competition.”
What Makes DeepSeek Special?
DeepSeek is an advanced AI-powered chatbot that functions similarly to OpenAI’s ChatGPT. It can answer user queries, generate text, analyze data, and engage in logical reasoning. However, several key aspects set DeepSeek apart:
1. Low-Cost Development
DeepSeek’s developers claim it was built with just $6 million (₹48 crore)—a fraction of the cost of OpenAI’s GPT-4, which reportedly required over $100 million for training.
2. Lower Memory Usage
Compared to other large AI models, DeepSeek uses less memory, making it faster and more cost-efficient to operate.
3. Restrictions on Sensitive Topics
Like other Chinese AI models, DeepSeek avoids politically sensitive questions. For instance, when BBC asked about the Tiananmen Square incident of June 4, 1989, DeepSeek refused to respond.
4. Innovative Chip Architecture
DeepSeek leverages a hybrid chip architecture, combining Nvidia’s restricted A100 chips with less advanced alternatives to achieve high AI performance despite hardware limitations.
DeepSeek's Founders and Their Strategy
DeepSeek was founded in December 2023 by Liang Wenfeng, who is also the CEO of High-Flyer, China’s first quant hedge fund. This fund uses AI to analyze financial data and assist in investment decision-making.
Liang Wenfeng has always emphasized technological self-reliance in China. He believes that “If the U.S. can succeed in quantitative trading, why can’t China?” The success of DeepSeek has further reinforced his vision.
To build DeepSeek, he strategically stockpiled 50,000 Nvidia A100 chips, which were banned from export to China in September 2022. He then combined these with cheaper and less advanced chips to develop a powerful AI model.
Impact on the American Tech Industry
The launch and massive success of DeepSeek have shaken American tech companies, proving that cutting-edge AI models can be developed even with limited resources.
Its impact was felt in financial markets on January 27, 2025:
- The Nasdaq index dropped by more than 3%.
- Nvidia’s stock plummeted by 17%.
- Nvidia’s total market value shrunk by approximately $600 billion (₹48.2 trillion).
This is considered one of the biggest single-day losses in U.S. history.
DeepSeek’s Success and the U.S.-China Tech Rivalry
DeepSeek’s success has raised questions about Washington’s policies aimed at restricting China’s tech industry. The U.S. has imposed export bans on advanced AI chips and other critical technologies to limit China’s progress. However, DeepSeek’s development has proven that China has made significant advancements in its technological capabilities.
Meanwhile, the Chinese government has prioritized AI and chip manufacturing as key areas of national development. President Xi Jinping has declared AI a “national strategic priority,” leading to massive investments in its research and growth.
Response to DeepSeek in China
DeepSeek is being seen as a symbol of China’s technological self-reliance. It represents China’s growing dominance in AI, challenging the influence of the U.S. and other Western nations.
However, some experts believe that DeepSeek’s development could promote technological isolationism. If China and the U.S. focus solely on their own AI systems without collaboration, it could hinder global AI progress.
What Will Be the Future Impact of DeepSeek?
DeepSeek’s success has demonstrated that China is now a major player in the AI industry. However, it also faces challenges—particularly regarding censorship and impartiality.
In the future, DeepSeek’s impact will depend on three key factors:
- Technological Advancement – Can it compete with models like OpenAI’s GPT-4 and GPT-5?
- Global Adoption – Will it be accepted in other countries, or remain limited to China?
- U.S. Response – Will American companies enhance their AI systems in response, or will the U.S. impose further restrictions on China?
DeepSeek has already disrupted the AI industry. The real question is how it will shape the global AI landscape in the coming years.
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