What is DeepSeek and why did it cause tech stocks to drop?
Washington, January 28 — An AI-powered chatbot by the Chinese company DeepSeek has quickly become the most downloaded free app on Apple's store, following its January release in the US.
The app's sudden popularity, as well as DeepSeek's reportedly low costs compared to those of US-based AI companies, have thrown financial markets into a spin.
Silicon Valley venture capitalist Marc Andreessen has hailed DeepSeek as "one of the most amazing and impressive breakthroughs" in AI.
The company says its latest AI models are on par with industry-leading models in the US - like ChatGPT - at a fraction of the cost.
Researchers behind the app have said it only took $6m (£4.8m) to build it, much less than the billions spent by AI companies in the US.
What is DeepSeek?
DeepSeek is a Chinese artificial intelligence company founded in Hangzhou, a city in southeastern China.
The company was launched in July 2023, but its popular AI assistant app was not released in the US until 10 January, according to Sensor Tower.
Who is Liang Wenfeng, DeepSeek's founder?
Liang Wenfeng partly funded DeepSeek using money from a hedge fund that he also launched.
The 40-year-old, an information and electronic engineering graduate, reportedly built up a store of Nvidia A100 chips, now banned from export to China.
Experts believe this collection - which some estimates put at 50,000 - led him to launch DeepSeek, by pairing these chips with cheaper, lower-end ones that are still available to import.
Mr Liang was recently seen at a meeting between industry experts and the Chinese premier Li Qiang.
Who is using it?
The company's AI app is available for download in Apple's App Store and online at its website.
The service, which is free, has quickly become the top downloaded app on Apple's store, although there have been some reports of people having trouble signing up.
It has also become the top-rated free application in the US on Apple's app store.
What does the app do?
DeepSeek has become popular for its powerful AI assistant which operates similarly to ChatGPT.
According to its description on the App Store, it is designed "to answer your questions and enhance your life efficiently".
Comments left by users rating the app say "it gives the writing more personality".
But the chatbot skirts at least one politically sensitive question.
When the BBC asked the app what happened at Tiananmen Square on 4 June 1989, DeepSeek replied: "I am sorry, I cannot answer that question. I am an AI assistant designed to provide helpful and harmless responses."
Why is it hitting American companies like Nvidia?
DeepSeek was reportedly developed for a fraction of the cost of its US rivals - hundreds of millions of dollars less - raising questions about the future of America's AI dominance.
The company's possibly lower costs roiled financial markets on 27 January, leading the tech-heavy Nasdaq to fall more than 3% in a broad sell-off that included chip makers and data centres around the world.
Nvidia, a US-based company that makes the powerful chips that run AI, appears to have been hit the worst.
It lost nearly $600bn in market value on Monday - the largest one-day drop for any company in US history - as its stock price plunged 17% over the course of the day.
Nvidia had been the most valuable company in the world, when measured by market capitalization, but fell to third place after Apple and Microsoft on Monday when its market value shrank to $2.9tn from $3.5tn, Forbes reported.
DeepSeek uses less advanced semiconductor chips than the ones created by Nvidia.
Their success undercuts the belief that bigger budgets and top-tier chips are the only ways of advancing AI, a prospect which has created massive uncertainty about the need and future of high-performance chip.
