Shares in leading US technology companies, including AI chip-maker Nvidia, Microsoft, and Meta, experienced a significant decline on Monday following the rapid rise of a low-cost chatbot developed by Chinese artificial intelligence (AI) firm DeepSeek.
The DeepSeek app, launched just last week, has quickly become the most downloaded free app in the US, surpassing competitors like OpenAI’s ChatGPT. The app’s success has sparked concerns among investors about the growing competition in the AI sector, particularly from Chinese firms.
In a related development, DeepSeek announced on Monday that it would temporarily limit new user registrations due to “large-scale malicious attacks” on its software. The company did not provide further details about the nature of the attacks but assured users that it is working to resolve the issue.
The Man Behind DeepSeek
DeepSeek was founded by Liang Wenfeng, a 40-year-old information and electronic engineering graduate based in Hangzhou, a city in southeastern China. Liang, who also established the hedge fund that backed DeepSeek, reportedly amassed a significant stockpile of Nvidia A100 chips before their export to China was banned.
Experts believe that Liang’s access to these high-performance chips, combined with cheaper, lower-end alternatives still available for import, gave him the resources needed to develop DeepSeek. Some estimates suggest that Liang’s collection includes as many as 50,000 Nvidia A100 chips.
Liang’s influence in the tech industry was further highlighted when he was recently seen attending a meeting between industry experts and Chinese Premier Li Qiang.
Pricing Strategy and Market Reaction
In a July 2024 interview with The China Academy, Liang expressed surprise at the market’s reaction to the pricing of DeepSeek’s previous AI model. “We didn’t expect pricing to be such a sensitive issue,” he said. “We were simply following our own pace, calculating costs, and setting prices accordingly.”
The success of DeepSeek’s low-cost chatbot has raised questions about the competitive landscape of the AI industry, particularly as Chinese firms continue to innovate and challenge established players in the US and elsewhere.
Impact on US Tech Giants
The rapid rise of DeepSeek has sent shockwaves through the US tech sector, with shares in Nvidia, Microsoft, and Meta all falling sharply on Monday. Analysts suggest that the growing influence of Chinese AI firms could reshape the global AI market, forcing US companies to rethink their strategies and pricing models.
As the AI race intensifies, the world will be watching to see how US tech giants respond to this new challenge from China. For now, DeepSeek’s success serves as a reminder of the dynamic and competitive nature of the global AI industry.
Conclusion
The emergence of DeepSeek as a major player in the AI chatbot market underscores the increasing competition between US and Chinese tech firms. With its low-cost model and rapid adoption, DeepSeek has not only captured the attention of users but also disrupted the share prices of some of the world’s largest technology companies. As the AI landscape continues to evolve, the battle for dominance in this critical sector is far from over.
