China's AI assistant has officially entered the conversation, and the US is reporting it. DeepSeek rose to the top of Apple's App Store over the weekend, surpassing OpenAI's ChatGPT with lightning fast, very logical answers. Some users claim that its natural language processing, writing quality, and reasoning outperform its American counterparts, including OpenAI, Meta, and Google.
At the World Economic Forum in Davos, Switzerland last week, the excitement intensified around DeepSeek, a startup founded by Chinese hedge fund manager Liang Wenfeng, following the release of its DeepSeek R1 AI model. The model was reportedly built in just a few months, at a fraction of the cost of American models and works on less advanced ones Nvidia chipsraising questions about how China manages to compete without access to cutting-edge American technology.
Here's a deeper dive into what you need to know.
What is DeepSeek?
DeepSeek is attracting attention for its speed, efficiency and reasoning capabilities, prompting comparisons with leading US models like ChatGPT. It also sparked discussion about its high performance despite limited computing resources resulting from US export restrictions on advanced AI chips.
DeepSeek researchers previously claimed to have spent about $6 million to develop an earlier AI model, using roughly 2,000 H800 Nvidia chips, hardware with lower data transfer rates. Meanwhile, American companies are investing billions of dollars in the development of artificial intelligence.
Why is timing important?
DeepSeek launched on January 20 – the same day as President Donald Trump's inauguration – which coincided with renewed US efforts to maintain a lead in the growing AI arms race. Last week, Trump announced a new AI infrastructure initiative that pledged up to $500 million in partnership with OpenAI and other tech firms.
The timing also follows increased scrutiny of Chinese tech companies, with tensions already high over TikTok's data privacy concerns. Unlike TikTok, however, DeepSeek is an open-source model, meaning users can run it on their own computers. But its Chinese origins and long-term strategic implications remain under scrutiny.
What does this mean for the AI arms race?
DeepSeek's debut is already being hailed as a potential turning point in the global AI race. Prominent Silicon Valley investor Marc Andreessen he even called it “AI's Sputnik moment,” referring to the launch of the Russian satellite in the late 1950s that started the space race. The launch highlights how China may be closing the AI gap faster than expected.