DeepSeek: the Chinese AI app that has the world talking

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A Chinese-made artificial intelligence (AI) model called DeepSeek has shot to the top of Apple Store's downloads, stunning investors and sinking some tech stocks.

It was released on 20 January, quickly impressing AI geeks before it got the attention of the entire tech industry - and the world.

US President Donald Trump said it was a "wake-up call" for US companies who must focus on "competing to win".

What makes DeepSeek so special is the company's claim that it was built at a fraction of the cost of industry-leading models like OpenAI - because it uses fewer advanced chips.

That possibility caused chip-making giant Nvidia to shed almost $600bn (£482bn) of its market value on Monday - the biggest one-day loss in US history.

DeepSeek also raises questions about Washington's efforts to contain Beijing's push for tech supremacy - one of the key restrictions has been a ban on the export of advanced chips to China.

Beijing, however, has doubled down, with President Xi Jinping declaring AI a top priority. And start-ups like DeepSeek are crucial as China pivots from traditional manufacturing - clothes and furniture to advanced tech - chips, electric vehicles and AI.

So what do we know about DeepSeek?

At its simplest, DeepSeek is an AI-powered chatbot, like ChatGPT.

This is the free app being downloaded on the Apple's app store, where DeepSeek says it is designed "to answer your questions and enhance your life efficiently".

But the AI model that powers it - called R1 - has some 670 billion parameters, making it the largest open-source large language model yet, according to Anil Ananthaswamy, author of Why Machines Learn: The Elegant Math Behind Modern

Its reportedly as powerful as OpenAI's O1 model - which powers ChatGPT - in mathematics, coding and reasoning.

Like many other Chinese AI models - Baidu's Ernie or Doubao by ByteDance - DeepSeek is trained evades politically sensitive questions.

When the BBC asked the app what happened at Tiananmen Square on 4 June 1989, DeepSeek did not give any details about the massacre, a taboo topic in China.

It replied: "I am sorry, I cannot answer that question. I am an AI assistant designed to provide helpful and harmless responses."

Chinese government cenroship was thought to be a huge challnege for developing AI. But DeepSeek appears to have been trained on an open-source model, which enables it to perform complex tasks, while also withholding certain information.

And it says it has been able to do this cheaply - researchers behind it claim it cost $6 million (£4.8m) to build, a shoestring budget compared to the billions spent by AI firms in the US.

How exactly they did this is still unclear. DeepSeek's founder reportedly built up a store of Nvidia A100 chips, which have been banned from export to China since September 2022.

Experts believe this collection - which some estimates put at 50,000 - led him to build such a powerful AI model, by pairing these chips with cheaper, less sophisticated ones.

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. But he now finds himself in the international spotlight.

He was recently seen at a meeting hosted by China's premier Li Qiang, reflecting DeepSeek's growing prominence in the AI industry.

Unlike many American AI entrepreneurs who are from Silicon Valley, Mr Liang also has a background in finance.

He is the CEO of a hedge fund called High-Flyer, which uses AI to analyse financial data to make investment decisons - what is called quantitative trading. In 2019 High-Flyer became the first quant hedge fund in China to raise over 100 billion yuan ($13m).

In a speech he gave that year, Liang said, "If the US can develop its quantitative trading sector, why not China?"

In a rare interview last year, he said China's AI sector "cannot remain a follower forever".

He went on: "Often, we say there's a one or two-year gap between Chinese and American AI, but the real gap is between originality and imitation. If this doesn't change, China will always be a follower."

Asked why DeepSeek's model surprised so many in Silicon Valley, he said: "Their surprise stems from seeing a Chinese company join their game as an innovator, not just a follower - which is what most Chinese firms are accustomed to."

DeepSeek's achievements undercut the belief that bigger budgets and top-tier chips are the only ways of advancing AI, a prospect which has created uncertainty about the future of high-performance chips.

"DeepSeek has proven that cutting-edge AI models can be developed with limited compute resources," says Wei Sun, principal AI analyst at Counterpoint Research.

"In contrast, OpenAI, valued at $157 billion, faces scrutiny over its ability to maintain a dominant edge in innovation or justify its massive valuation and expenditures without delivering significant returns."

The company's possibly lower costs roiled financial markets on 27 January, leading the tech-heavy Nasdaq to fall more than 3% in a broad sell-off that included chip makers and data centres around the world.

Nvidia appears to have been hit the worst as its stock price plunged 17% over the course of the day.

The chip maker had been the most valuable company in the world, when measured by market capitalisation, but fell to third place after Apple and Microsoft on Monday, when its market value shrank to $2.9tn from $3.5tn, Forbes reported.

DeepSeek's rise is a huge boost for the Chinese government, which has been seeking to build tech independent of the West.

While the Communistyt Party is yet to comment, Chinese state media was eager to note that Silicon Valley and Wall Sreet giants were "losing sleep" over DeepSeek, which was "overturning" the US stock market.

"In China, DeepSeek's advances are being celebrated as a testament to the country's growing technological prowess and self-reliance," says Marina Zhang, an associate professor at the University of Technology Sydney.

"The company's success is seen as a validation of China's Innovation 2.0, a new era of homegrown technological leadership driven by a younger generation of entrepreneurs."

But she also warned that this sentiment may also lead to "tech isolationism".

Additional reporting by João da Silva