AI: A New Frontier for Global Competition
DeepSeek Overtakes ChatGPT as Top Free App on Apple’s App Store
DeepSeek, a Chinese AI app, has taken the top spot as the free app on Apple’s App Store, sparking market selloffs and raising questions about the US dominance in AI.
The Rise of DeepSeek
DeepSeek uses the open-source DeepSeek-V3 model, developed for under $6 million, significantly less than the billions spent by US firms. The cost claim is disputed, but DeepSeek’s popularity highlights China’s innovation despite US restrictions on advanced AI chip sales.
A New Approach to AI Development
To adapt, Chinese developers have shared resources and created models requiring less computing power and lower costs, disrupting industry norms. This approach has led to the development of DeepSeek-R1, launched this month, which claims performance comparable to OpenAI’s models in tasks like math and coding.
A “AI Sputnik Moment”
Industry experts have called this a potential “AI Sputnik moment,” but challenges remain for Chinese firms due to limited access to advanced chips, which analysts say still gives US companies an edge. Meanwhile, US firms are investing heavily, with $500 billion pledged to AI infrastructure in Texas.
The Founder’s Strategy
DeepSeek was founded in 2023 by Liang Wenfeng in Hangzhou. Liang, an engineering graduate and hedge fund founder, hoarded as many as 50,000 Nvidia A100 chips before export restrictions. His approach combined these with lower-end chips to reduce costs. Liang acknowledged surprise over the focus on pricing but emphasized his methodical strategy.
Expert Insights
“This idea of a low-cost Chinese version hasn’t necessarily been forefront, so it’s taken the market a little bit by surprise,” said Fiona Cincotta, senior market analyst at City Index. “So if you suddenly get this low-cost AI model, then that’s going to raise concerns over the profits of rivals, particularly given the amount that they’ve already invested in more expensive AI infrastructure.”
“It could potentially derail the investment case for the entire AI supply chain,” said Vey-Sern Ling, a technology equity advisor from Singapore-based Vey-Sern.
Conclusion
DeepSeek’s rise to the top spot on Apple’s App Store has sent shockwaves through the AI industry, sparking concerns about the US dominance and the cost of developing functional AI systems. As the global AI market continues to evolve, it remains to be seen how Chinese firms will adapt to the challenges ahead.
FAQs
Q: What is DeepSeek?
A: DeepSeek is a Chinese AI app that uses the open-source DeepSeek-V3 model to provide AI-powered services.
Q: How much did it cost to develop DeepSeek?
A: According to Liang Wenfeng, the founder, the cost was under $6 million.
Q: What is the significance of DeepSeek’s rise to the top spot on Apple’s App Store?
A: It highlights China’s innovation in AI and challenges the US dominance in the field.
Q: What are the challenges facing Chinese firms in the AI industry?
A: Limited access to advanced chips and the need for significant investment in AI infrastructure are among the challenges.
Q: What is the investment pledged to AI infrastructure in Texas?
A: $500 billion is the amount pledged by US firms to AI infrastructure in Texas.