Over the last few weeks, the world woke up to the news that a new start-up was once again causing disruption in the Artificial Intelligence (AI) business.
Chinese-made AI model DeepSeek also known as R1 was launched on January 20, 2025, and in just one week, it has become the most downloaded free app in the US, displacing ChatGPT at the top of the iOS app store
The free AI-powered chatbot looks, feels and works very much like ChatGPT and is reportedly as powerful as the OpenAI o1 model behind ChatGPT.
It is powered by the open-source DeepSeek-V3 model.
DeepSeek was founded in December 2023 by Liang Wenfeng and released its first AI large language model the following year.
Not much is known about Liang, who graduated from Zhejiang University with degrees in electronic information engineering and computer science.
The company said it had spent about $6 million on computing power for its base model, compared with the hundreds of millions or billions of dollars US companies spend on their AI technologies.
It offers a free version and should one want to use the premium version of it, the cost is over 95 per cent cheaper compared to American AI platforms.
Following its launch, US stocks dropped significantly with most tech companies hit.
Nvidia, the leading supplier of AI chips, fell nearly 17 per cent and lost $588.8 billion in market value. Meta and Alphabet, Google’s parent company, were also down sharply.
Marvell, Broadcom, Micron and TSMC all fell sharply, too. Oracle (ORCL), Vertiv, Constellation, NuScale and other energy and data center companies tumbled.
This drop has caused concern with many questioning how this is possible, especially with the amount of money spent on building it.
DeepSeek, however, says its model was developed with existing technology along with open-source software that can be used and shared by anybody for free.
Many American experts have also expressed concerns over the new AI model, with many asking what it means for the future of the US as a tech leader.
US President Donald Trump in a statement reacting to the reports referred to it as a wake-up call for the US tech industry.
Trump said the developments may also be "a positive" for the US.
"If you could do it cheaper if you could do it [for] less [and] get to the same result. I think that's a good thing for us," BBC quotes the 47th US President.
He reaffirmed that the US will remain a leader in the tech business.
