DeepSeek AI: How to use? Why is US alarmed by the rise of China’s AI? Explained

Chinese AI company DeepSeek has caused quite a stir by overtaking ChatGPT as the top free game on the Apple App Store. Since its launch in late 2022, ChatGPT has continued to lead the AI race despite growing competition from Google, Meta and Anthropic, but DeepSeek now appears to be the next big thing in AI. Here’s a look at what DeepSeek is, why it’s got markets worried, and more.

What is DeepSeek?

DeepSeek is an AI startup founded in July 2023 by Liang Wenfeng in the eastern Chinese city of Hangzhou. The company shot to fame last month after various benchmarks showed that its V3 large language model (LLM) outperformed those of many popular US tech giants, while being developed at a much lower cost.

DeepSeek’s R1 reasoning model, which mimics aspects of human reasoning, also matched and outperformed OpenAI’s latest O1 model in various benchmarks.

At the time of writing, both DeepSeek R1 and DeepSeek V3 were ranked in the top 10 on Chatbot arena, a UC Berkeley-affiliated ranking that assesses the performance of leading chatbots. While Google’s Gemini 2.0 Flash and ChatGPT 4-o were both ahead of DeepSeek’s models, it ranked ahead of models from Elon Musk’s xAI and Amazon backed Anthropic.

What DeepSeek can’t do?

While DeepSeek’s chatbots can compete with their Western counterparts on almost every metric, they are reluctant to answer questions that are sceptical of China. Any such question is met with the reply, “Sorry, that’s beyond my current scope. Let’s talk about something else.”

Why is DeepSeek a cause of worry for US?

DeepSeek’s LLMs are built at a much lower cost, challenging the prevailing belief that running AI models requires ever-increasing amounts of computing power. In a paper last month, DeepSeek researchers said the V3 model used Nvidia H800 chips for training and cost less than $6 million – a paltry sum compared to the billions that AI giants such as Microsoft, Meta and OpenAI have pledged to spend this year alone.

DeepSeek’s rapid rise suggests that it is likely to cut into the market share of top US AI makers such as OpenAI, Meta, Google and others. The low-cost Chinese models are also likely to force Western companies to lower their prices to remain competitive.

Moreover, the success of DeepSeek has also called into question the effectiveness of export restrictions on advanced AI chips, a policy introduced by the Biden administration to slow the growth of artificial intelligence in hostile countries.

How to use DeepSeek?

DeepSeek is available as a free app in both the Apple and Google app stores. The Chinese company’s latest AI models can also be accessed via its website chat.deepseek.com.

However, DeepSeek announced on Monday that it was temporarily halting registrations due to a large-scale malicious attack on its services.

What impact has DeepSeek on markets?

The DeepSeek AI disruption has hit Jensen Huang’s Nvidia the hardest, but the scenario is unpleasant across the board — the S&P 500 dropped, and the Nasdaq slumped over 3 per cent.

On January 27, the US tech-heavy Nasdaq slipped 3.1 per cent, largely due to Nvidia’s drag, which lost a record 17 per cent overnight, followed by chip maker Broadcom Inc, which finished down 17.4 per cent, ChatGPT backer Microsoft down 2.1 per cent, and Google parent Alphabet down 4.2 per cent, as per the Reuters report.

Who is Liang Wenfeng

Liang Wenfeng, 40, is a Chinese entrepreneur and businessman with a background in finance. In 2015, he co-founded the quantitative hedge fund, High-Flyer, after completing graduation from Zhejiang University. Through High-Flyer, he used AI for trading strategies to predict market trends and help make investment decisions.

In 2021, he started buying thousands of Nvidia graphics processors as an AI side project before the Joe Biden-led US government restricted US exports of AI chips to China, according to the Financial Times (FT). During this time, his acquaintances saw this AI side project as a quirky hobby without any goal.

Even though DeepSeek was viewed as a side project initially, Liang was personally involved in the company and its research. He also plans to make DeepSeek a homegrown leader in AI by recruiting top talent from Chinese universities and paying them at a scale of local top social media platform TikTok’s parent company ByteDance.

What is Silicon Valley saying about DeepSeek?

OpenAI CEO Sam Altman in subsequent posts on X went on to praise DeepSeek’s R1 model but promised to make better models in the future. He wrote, “deepseek’s r1 is an impressive model, particularly around what they’re able to deliver for the price.

we will obviously deliver much better models and also it’s legit invigorating to have a new competitor! we will pull up some releases.”

Meta Chief AI scientist Yann LeCun wrote in a post on Threads, “DeepSeek has profited from open research and open source (e.g. PyTorch and Llama from Meta). They came up with new ideas and built them on top of other people’s work. Because their work is published and open source, everyone can profit from it. That is the power of open research and open source.”

Meanwhile, venture capitalist Marc Andreessen called DeepSeek a profound gift to the world. He wrote in a post on X, “Deepseek R1 is one of the most amazing and impressive breakthroughs I’ve ever seen — and as open source, a profound gift to the world. 🤖🫡”

Salesforce CEO Mark Benioff referred to the startup as ‘Deepgold’ in a post on X, writing, “Deepseek is now #1 on the AppStore, surpassing ChatGPT—no NVIDIA supercomputers or $100M needed. The real treasure of AI isn’t the UI or the model—they’ve become commodities. The true value lies in data and metadata, the oxygen fueling AI’s potential. The future’s fortune? It’s in our data. Deepgold. 😇”