[An image of a computer chip part. Photo credit: Rawpixel]

DeepSeek, a Chinese AI company, released their latest model DeepSeek-R1 to the public on January 20, 2025.

The company was founded in 2023 by Liang Wenfeng, who leveraged backing from his hedge fund High-Flyer that backs DeepSeek.

The company boasted that DeepSeek-R1 was on par in terms of performance with OpenAI’s latest models in key areas such as math, coding, and natural language reasoning. 

The company recently gained worldwide attention after revealing that their newest model, DeepSeek-V3, was developed with computational costs of less than $6 million.

The revelation has prompted debates about efficiency and cost-effectiveness in AI development, positioning DeepSeek as a rising competitor in the field.

This development stands in stark contrast to the approximately one trillion dollars that major U.S. companies like OpenAI and Google are projected to invest in their comparable models.

The news triggered a one trillion dollar stock market crash affecting leading AI development companies including NVIDIA, TSMC, Broadcom, and Astera, though markets stabilized by the following day.

Following the release of OpenAI’s ChatGPT in late 2022, Chinese tech firms rushed to develop their own AI chatbots. 

While Chinese search engine Baidu’s attempt initially highlighted the technological gap between China and the United States, DeepSeek’s new AI model has dramatically altered this dynamic.

An investigation by MIT revealed that DeepSeek R-1 was developed using NVIDIA’s A100 chips, raising questions about compliance with the Biden Administration’s 2022 ban on CPU exports to China. 

Tesla CEO and X owner Elon Musk appeared to confirm speculation about DeepSeek owning 50,000 NVIDIA chips with a single-word response: “Obviously.”

DeepSeek’s AI assistant is currently available in the U.S. through the App Store, though concerns have emerged regarding its privacy policy.

The assistant collects and stores a wide range of user data - including date of birth, keystrokes, text and audio inputs, uploaded files, and chat history - on servers located in China.

 This has raised questions about data security and user privacy, particularly in light of growing scrutiny over Chinese-owned apps like Temu and TikTok.

The White House press secretary Karoline Leavitt emphasized the administration’s commitment to “ensure American AI dominance.” 

President Donald Trump weighed in on January 27, 2025, calling the Chinese app a “wakeup call for our industries that we need to be laser-focused on competing to win.”

Although the leaders of major American AI companies have publicly praised DeepSeek’s progress, reports suggest they are working behind the scenes to scrutinize and identify potential weaknesses in the model.