Deepseek sudden popularity and cost gap have caused a major shift in the technology market

 

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Within days of its release in the US market, Chinese company deepseek artificial intelligence (AI)-powered chatbot has topped the list of most downloaded free apps on the Apple Store. The app’s sudden popularity and the cost gap between deepseek and US AI companies have sparked a major shift in the technology market. Silicon Valley entrepreneur Marc And reessen has called it one of the most groundbreaking discoveries in the AI world, causing widespread concern among US companies. deepseek parent company asserts that its new AI model is the market leader in this sector. However, compared to ChatGPT, deepseek AI model costs significantly less to develop.

The research team behind deepseek revealed that it cost them $6 million to build the app, which is $10 million less than US-based ChatGPT. This raises questions about how deepseek managed to develop a competitive AI model at a fraction of the cost compared to the billions of dollars typically spent by US AI companies. The company was founded in the southeastern Chinese city of Hangzhou in July 2023, but its popular AI assistant app was released in the US on January 10 of this year.

Liang Wenfeng, the co-founder of deepseek, funded the company using money from a hedge fund he founded. A 40-year-old information and technology graduate, Wenfeng secured a large stockpile of A100 chips with the American company NVDR. These chips are currently banned from export to China. According to experts, Wenfeng’s collection for deepseek establishment consists of approximately 50,000 chips. By combining these high-end chips with relatively cheap chips that are still legally exported to China, deepseek successfully created its AI app, now freely available on Apple’s App Store and the deepseek website.

deepseek app quickly became the top-downloaded app in the Apple Store and the highest-rated free app in the United States. It also maintained the top position in App Store ratings due to its efficiency and ease of use. deepseek gained popularity for its powerful AI assistant tool, which offers advanced chatbot functions similar to OpenAI’s ChatGPT. The App Store describes it as “designed to help you work smarter and answer your questions.

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Meanwhile, the cost of developing deepseek AI assistant is considerably lower than the cost of developing AI models in the US. This disparity has raised concerns about the US’s continued dominance in the AI market. The affordability of deepseek technology has significantly shifted the balance of capital markets worldwide. On January 27, global markets saw major disruptions, particularly in the chip-making and data center industries.

The biggest impact was on US-based Nvidia, a leader in AI chip production. Nvidia, which provides powerful chips for AI applications, saw its market value fall by $600 billion in a single day—the largest one-day drop in US history for a company of its size. This event caused Nvidia to drop from the world’s most valuable company status, as its market capitalization plunged from $35 trillion to $29 trillion on Monday. Nvidia’s fall placed it in third place, behind Microsoft and Apple, as the most valuable companies globally.

Deepseek ability to develop competitive AI with significantly lower costs and less complex technology has forced the world’s top AI chip manufacturers to confront a new reality. The success of deepseek has sparked debates over how China is managing to produce AI tools that are both highly functional and economically feasible. The shift in the AI landscape has left US-based companies scrambling to reassess their strategies in an increasingly competitive global market.

Industry analysts believe deepseek rapid rise highlights China’s growing capabilities in AI research and development. While US companies have traditionally led the AI race, the emergence of companies like DeepSec challenges their dominance. The competitive pricing and accessibility of deepseek AI model have allowed it to penetrate the US market in unprecedented ways.

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Governments and regulatory bodies are closely watching the impact of deepseek success. Some US policymakers have raised concerns about national security implications due to the widespread adoption of AI models developed by foreign companies. Discussions are underway about potential regulations that could limit or monitor the use of foreign AI systems in critical infrastructure and business applications.

The case of deepseek underscores the broader trend of AI democratization, where AI technology is becoming more accessible and affordable to a global audience. As AI technology continues to evolve, new players will emerge, potentially reshaping the market in unpredictable ways. The question remains: will US AI firms adapt to this new competitive landscape, or will deepseek success mark the beginning of a broader shift in global AI dominance?

The future of AI competition now hinges on technological innovation, cost efficiency, and strategic investments. Companies that can develop AI models at a lower cost while maintaining high performance will have a distinct advantage. deepseek breakthrough serves as both a challenge and an opportunity for the AI industry.

While it is still early to predict the long-term implications, one thing is clear: the rise of deepseek has disrupted the AI sector in ways that will continue to unfold in the coming years. The world will be watching closely to see how this competitive battle between the US and China in AI technology plays out. The coming months will determine whether deepseek can maintain its lead or if US companies will find a way to regain their dominance. Regardless of the outcome, this event has already made history in the world of artificial intelligence.

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