Explainer | How tech start-up DeepSeek emerged as the unlikely game changer in US-China AI war

DeepSeek sent shock waves through the global tech market ahead of the Lunar New Year – sinking the value of semiconductor giant Nvidia and other large companies driving the artificial intelligence (AI) boom – as the Chinese start-up achieved a feat once-considered impossible by Silicon Valley.

The Hangzhou-based firm over the past several weeks released two powerful new AI models, DeepSeek-V3 and DeepSeek-R1, that were built at a fraction of the cost and computing power that major tech companies muster to build large language models (LLMs) – the technology underpinning generative AI services like ChatGPT.

On social media, the AI community expressed admiration for how DeepSeek’s two open-source models either surpassed or matched the performance of rival products across a range of industry benchmark tests, in spite of tightened US restrictions on China’s access to advanced semiconductors and related technologies. In a post on X, OpenAI chief executive Sam Altman said: “DeepSeek’s R1 is an impressive model, particularly around what they’re able to deliver for the price.”

The AI industry’s buzz over DeepSeek appeared to reach a crescendo on Monday when news spread that its namesake chatbot, integrated with the R1 reasoning model, claimed the top spot among free-to-use apps on Apple’s App Stores in the US and China.