DeepSeek, a Chinese AI application, has rapidly become the most downloaded free app on Apple’s App Store, surprising investors and affecting technology stocks. Its latest version, released on 20 January 2025, quickly gained attention from AI experts and the broader tech industry.

The app’s developer claims it was built at a fraction of the cost of leading models like OpenAI’s, utilising fewer advanced chips. This development led to a significant decline in the market value of chip-making giant Nvidia, which saw a reduction of almost $600 billion—the largest one-day loss in US history.

DeepSeek’s emergence raises questions about the effectiveness of US efforts to limit China’s technological advancement, particularly through restrictions on exporting advanced chips. Despite these constraints, China has prioritised AI development, with President Xi Jinping emphasising its importance. Start-ups like DeepSeek are central to China’s shift from traditional manufacturing to advanced technologies such as chips, electric vehicles, and AI.

DeepSeek is a free AI-powered chatbot, functioning similarly to ChatGPT, and is used for tasks like writing emails, summarising text, and answering questions. Reports suggest it matches OpenAI’s o1 model in areas including mathematics and coding. Notably, DeepSeek is designed to avoid politically sensitive topics. For instance, when asked about the events at Tiananmen Square on 4 June 1989, it responds: “I am sorry, I cannot answer that question. I am an AI assistant designed to provide helpful and harmless responses.”

The company claims that developing DeepSeek cost $6 million, significantly less than the “over $100 million” reportedly spent by OpenAI on GPT-4. The founder, Liang Wenfeng, reportedly amassed a collection of Nvidia A100 chips, which have been restricted from export to China since September 2022. By combining these with less advanced chips, he developed a powerful AI model.

On the same day DeepSeek’s AI assistant became the most-downloaded free app on Apple’s App Store in the US, the company reported “large-scale malicious attacks,” leading to temporary limitations on new user registrations.

Liang Wenfeng, who graduated from Zhejiang University with degrees in electronic information engineering and computer science, founded DeepSeek in December 2023. He also serves as the CEO of High-Flyer, a hedge fund that utilises AI for quantitative trading. In 2019, High-Flyer became the first quant hedge fund in China to raise over 100 billion yuan.

The rise of DeepSeek has prompted reactions from US officials. President Donald Trump described it as a “wake-up call” for American companies, urging them to focus on competition. The app’s success has also led to concerns about data privacy and security, with some experts cautioning users about potential risks associated with Chinese-developed applications.

DeepSeek’s rapid ascent has had significant financial implications. Its achievements have challenged the notion that substantial budgets and top-tier chips are necessary for AI advancement, leading to uncertainty about the future of high-performance chips. This development has caused notable declines in the stock prices of major tech companies, including Nvidia, Meta Platforms, Microsoft, and Alphabet.

In China, DeepSeek’s success is celebrated as evidence of the country’s growing technological capabilities and self-reliance. However, this sentiment also raises concerns about potential “tech isolationism.”

DeepSeek’s rise has sparked discussions about the future of AI development, the balance between innovation and regulation, and the global dynamics of technological competition.