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Ben Jiang

Bien Perez

DeepSeek, extolled by some as the “biggest dark horse” in the open-source large language model (LLM) arena, now has a bull’s eye on its back, as the start-up is being touted as China’s secret weapon in the artificial intelligence (AI) war with the US.
The Hangzhou-based company sent shock waves across Wall Street and Silicon Valley for developing AI models at a fraction of the cost compared with OpenAI and Meta Platforms, which prompted US President Donald Trump to call the breakthrough a “wake-up call” and “positive” for America’s tech sector.
At home, Chinese tech executives and various commentators rushed to hail DeepSeek’s disruptive power.
Zhou Hongyi, co-founder, chairman and chief executive of Chinese cybersecurity firm Qihoo 360, declared that DeepSeek has “upended the world” in a recent video posted on his Weibo account, after the start-up’s release of two powerful new AI models – built at a lower cost and with less computing resources than what larger tech firms typically need for LLM development.
In a widely shared Weibo social media post, Feng Ji, founder and chief executive at Black Myth: Wukong developer Game Science, wrote that DeepSeek’s achievements in AI could change China’s “national fate” amid its prolonged tech war with the US.
On January 20, DeepSeek publicly released its open-source R1 reasoning model, which it claims is on par with the performance of OpenAI’s o1 – a model that the US start-up said can “reason through complex tasks and solve harder problems than previous models in science, coding and maths”.
DeepSeek integrated R1 into its namesake AI chatbot, which was released on January 10 and recently took the top spot on Apple’s US App Store, dethroning ChatGPT. DeepSeek’s chatbot was also the most downloaded free app on Apple’s China App Store as of Monday.


These developments followed the December 26 public release of DeepSeek’s V3 model, which was trained in around two months at a cost of US$5.58 million with significantly fewer computing resources and said to have outperformed LLMs from bigger tech firms in benchmark tests.
Citing the global attention received by DeepSeek, Qihoo 360’s Zhou said in his social-media post: “We should have confidence that China will eventually win the AI war with the US.”
LLM refers to the technology underpinning generative AI services such as OpenAI’s ChatGPT. Open source gives public access to a software program’s source code, allowing third-party developers to modify or share its design, fix broken links or scale up its capabilities.
DeepSeek’s more cost-efficient development of powerful models, compared with what bigger tech companies spend, shows how far Chinese AI firms have progressed, despite US sanctions that have largely blocked their access to advanced semiconductors used for training LLMs.
“China is the only market that pursues LLM efficiency owing to chip constraints,” Jefferies equity analyst Edison Lee wrote in a research note on Monday.
He pointed out that the Trump administration is likely to recognise that the risk of further restrictions would “force China to innovate faster”.
The buzz on DeepSeek’s AI model breakthrough over the weekend set off an AI stock market rout on Monday, as it raised questions over technological dominance of the US. Shares of major US AI and semiconductor companies slumped on a wave of fear that Chinese companies were poised to surpass them in the high-stakes battle for supremacy.
American semiconductor giant Nvidia’s stock price, for example, sank as much as 25 per cent on Monday before closing at US$118.58, down 16.8 per cent, erasing nearly US$600 billion in market value. In Europe, tech stocks led market losses, with shares of chip equipment maker ASML Holding sliding down more than 8 per cent.
“Re-evaluating computing power needs could cause 2026 AI capex to fall or not grow,” Lee said in the Jefferies research note.

“Despite DeepSeek’s amazing model efficiency, it has not accelerated any AI monetisation,” Lee added.
DeepSeek, which was spun off from Chinese hedge-fund manager High-Flyer Quant, last week made its R1 reasoning model free to use, while OpenAI charges US$200 monthly for unlimited access to its o1 models.
In an essay posted on Monday in online publishing platform Substack, US entrepreneur and AI expert Gary Marcus said: “The race for ‘AI Supremacy’ is over, at least for now, and the US didn’t win.”
Marcus, co-author of the book Rebooting AI: Building Artificial Intelligence We Can Trust, said DeepSeek’s development of an AI model “that required only roughly 1/50th of the training costs of previous models” instantly put the start-up “in the big leagues with American companies like OpenAI, Google, and Anthropic, both in terms of performance and innovation”.
“None of this means, however, that China won the AI race or even took the lead,” he said. “American companies will incorporate these new results and continue to produce new results of their own.”
Still, Marcus gave “some style points to China, for doing so much without hundreds of thousands of Nvidia H100s”, the much in-demand advanced graphics processing units that the US has barred from being exported to Chinese firms.


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DeepSeek

DeepSeek’s tech breakthrough hailed in China as answer to win AI war

Artificial intelligence start-up DeepSeek was spun off from Chinese hedge-fund manager High-Flyer Quant. Photo: Reuters 

Chinese Premier Li Qiang, left, listens to DeepSeek founder Liang Wenfeng at a meeting in Beijing on January 20, 2025. Photo: CCTV

Chinese AI disrupter DeepSeek claims top spot in US App Store, dethroning ChatGPT

The DeepSeek logo and website seen on a smartphone in this arranged illustration taken May 14, 2024. Photo: Shutterstock

DeepSeek founder Liang Wenfeng (right) was invited to meet Chinese Premier Li Qiang last week. Photo: CCTV

Tech war: China poised to expand AI infrastructure to keep pace with US Stargate project

The US-China rivalry in artificial intelligence has widened to cover the digital infrastructure used to drive the technology’s development. Photo: Shutterstock

US President Donald Trump announces the Stargate Project – accompanied by, from left, Oracle chairman Larry Ellison, SoftBank Group chief executive Masayoshi Son and OpenAI chief executive Sam Altman – in a press conference at the White House on January 21, 2025. Photo: TNS

Elon Musk, who founded artificial intelligence start-up xAI to challenge OpenAI, casts doubt on the investment behind the Stargate Project. Photo: Shutterstock

Beijing meeting puts spotlight on China’s new face of AI, DeepSeek founder Liang Wenfeng

Chinese Premier Li Qiang, second from left, directly sits across DeepSeek founder Liang Wenfeng at Monday’s symposium in Beijing to hear the opinions and suggestions from industry experts – in the fields of technology, education, science, culture, health and sports – for a draft government work report. Photo: Xinhua

Hangzhou-based DeepSeek was spun off from hedge-fund manager High-Flyer Quant. Photo: Shutterstock

Meet DeepSeek: the Chinese start-up that is changing how AI models are trained

Artificial intelligence start-up DeepSeek has built a powerful large language model at less cost than what bigger tech firms spend on such projects. Photo: Shutterstock

Jim Fan, a senior research scientist at semiconductor design giant Nvidia, says he has been closely following developments at artificial intelligence start-up DeepSeek. Photo: SCMP

A screenshot of a response by DeepSeek’s V3 model, which mistakenly identified itself as OpenAI’s ChatGPT. Photo: X

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‘We should have confidence that China will eventually win the AI war with the US,’ Qihoo 360’s Zhou Hongyi said in a Weibo post


‘We should have confidence that China will eventually win the AI war with the US,’ Qihoo 360’s Zhou Hongyi said in a Weibo post.


DeepSeek’s tech breakthrough hailed in China as answer to win AI war

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}‘We should have confidence that China will eventually win the AI war with the US,’ Qihoo 360’s Zhou Hongyi said in a Weibo post

‘We should have confidence that China will eventually win the AI war with the US,’ Qihoo 360’s Zhou Hongyi said in a Weibo post