US President Donald Trump has described the emergence of Chinese company, DeepSeek as “a wake-up call” for the US tech industry.
Trump stated this after the rise of its artificial intelligence (AI) model triggered shockwaves on Wall Street.
DeepSeek said its artificial intelligence models are comparable with those from US giants, like OpenAI which is behind ChatGPT and Google’s Gemini, but potentially a fraction of the cost.
Shares in major tech firms such as Nvidia fell sharply, with the chip giant losing almost $600bn (£482bn) in market value.
What has shaken the industry is DeepSeek’s claim that its R1 model was made at a fraction of the cost of its rivals – raising questions about the future of America’s AI dominance and the scale of investments US firms are planning.
DeepSeek has become the most downloaded free app in the US just a week after it was launched.
However, the US president believes the success of the Chinese firm could be helpful to America’s AI aspirations.
“The release of DeepSeek, AI from a Chinese company, should be a wakeup call for our industries that we need to be laser-focused on competing to win,” Trump said.
He indicated that if Chinese industry could come up with cheaper AI technology, US companies would follow.
“We always have the ideas. We’re always first. So I would say that’s a positive that could be very much a positive development.
“So instead of spending billions and billions, you’ll spend less, and you’ll come up with, hopefully, the same solution,” Trump said.
The intense attention on the Chinese firm has not all been good news though. It reported suffering “large-scale malicious attacks” on its services.
The company said it was hit by a cyber attack on Monday which disrupted users’ ability to register on the site.
Sam Altman, CEO of OpenAI, has promised to outperform rival firm DeepSeek.
He pointed to DeepSeek’s ability to use fewer computing resources. “I view that as a positive, as an asset… you won’t be spending as much, and you’ll get the same result, hopefully,” he added.
On Monday, the DeepSeek assistant had surpassed ChatGPT in downloads from Apple’s app store.
DeepSeek launched a free assistant it says uses less data at a fraction of the cost of the major players in the industry
“DeepSeek’s r1 is an impressive model, particularly around what they’re able to deliver for the price,” he wrote.
But Altman was also defiant: “We will obviously deliver much better models and also it’s legit invigorating to have a new competitor! we will pull up some releases.”
DeepSeek is a startup founded in 2023 in Hangzhou, China.
Its CEO Liang Wenfeng previously co-founded one of China’s top hedge funds, High-Flyer, which focuses on AI-driven quantitative trading.
By 2022, it had created a cluster of 10,000 of Nvidia’s high-performance chips which are used to build and run AI systems. The US then restricted sales of those chips to China.
DeepSeek said recent AI models were built with Nvidia’s lower-performing chips, which are not banned in China – suggesting cutting-edge technology might not be critical for AI development.
In January 2024 it released R1, a new AI model which it claimed was on par with similar models from US companies, but is cheaper to use depending on the task.
Since DeepSeek’s chatbot became available as a mobile app it has surpassed rival ChatGPT in downloads from Apple’s app store.
There have been concerns DeepSeek could undermine the potentially $500bn (£401bn) AI investment by OpenAI, Oracle and SoftBank in Stargate which Mr Trump announced last week at the White House.
That project essentially aims to build vastly more computing power to boost AI development.
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