DeepSeek: The Chinese AI Company Shaking Up the Tech World

The emergence of DeepSeek, a Chinese artificial intelligence company with a low-cost, high-performance AI assistant, has sent shockwaves through global markets. The sudden success of DeepSeek’s AI-powered app and its shocking cost efficiency has led to one of the largest market capitalization losses in history.

DeepSeek’s rise challenges the dominance of U.S.-based AI companies, particularly Nvidia, and raises questions about whether cutting-edge AI requires only high-cost chips and substantial budgets. Here’s a detailed look at what DeepSeek is, how it operates, and its impact on the global tech market.

What is DeepSeek?

Founded in Hangzhou, China, DeepSeek is a startup that entered the AI scene in mid-2023. It made its notable entrance in January 2024 when its AI assistant app was released, quickly becoming the most downloaded free app on Apple’s App Store. The app gained attention for delivering high-quality AI performance at a fraction of the cost compared to its American counterparts.

Visionary Behind DeepSeek: Liang Wenfeng

Liang Wenfeng, the 40-year-old founder of DeepSeek, is an entrepreneur and engineer who launched the startup with funds from his hedge fund. According to reports, he secured a significant number of Nvidia A100 chips before their export to China was banned, a strategy that helped keep DeepSeek’s production costs low.

Market Impact

The launch of DeepSeek’s app in January 2024 quickly made waves, as it proved that a startup could produce a sophisticated AI model for a fraction of the cost of U.S. competitors. On January 27, 2024, Nvidia’s stock dropped by 17%, wiping out $593 billion in market value. This decline sparked broader concerns in the tech sector about the necessity of expensive hardware and large research budgets to create top-tier AI models.

Impact on Nvidia’s Market Value

DeepSeek’s success has raised questions about whether expensive data centers and high-performance chips are truly necessary for developing cutting-edge AI. The market volatility following DeepSeek’s rise signals a potential shift in the AI landscape, where affordable AI solutions might become the norm.