DeepSeek, a Chinese AI chatbot, has become the top-rated free application on Apple’s App Store in the US, UK, and China since its launch in January 2025.
The DeepSeek-V3 model was reportedly developed for less than $6 million, a fraction of the billions spent by competitors like OpenAI. As you would imagine, some analysts doubt this figure. However, what’s not up for debate is that it cost DeepSeek magnitudes less to develop than the competition.
The rise of DeepSeek has led to a decline in shares of major US AI companies, with Nvidia, Microsoft, and Meta experiencing significant drops.
This is because if it costs this little to compete with OpenAI and the rest, then the billions they have spent might not be recoupable. It’s extraordinary that DeepSeek cost in the millions, whilst the likes of ChatGPT and Gemini cost tens, if not hundreds, of billions.
Despite the lower expenditure, DeepSeek-R1 surpasses leading competitors on several benchmarks, which shows the potential for more capital-efficient AI advancements.
Hence, investors are starting to question just how inefficient the current AI leaders are, as evidenced by the falling share prices of companies across the entire chain.
Siemens, which produces AI-related hardware, saw its shares fall by 20%, whilst ASML, a chipmaker, saw its shares drop by 10% as word about DeepSeek spread.
DeepSeek was founded by Liang Wenfeng in 2023, who previously amassed a collection of Nvidia A100 chips, now banned from export to China.
Some are calling DeepSeek’s emergence a potential ‘Sputnik moment’ for AI, indicating a shift in the competitive landscape dominated by American firms. It’s a logical conclusion when one can deliver more or less the same product for magnitudes less.
Remember, a $6 million price tag compares to a $60 billion one the same way a $600 one compares to a $6 million one. So, imagine you invest in a company that says it needs $6 million to produce something, and then another company delivers a comparable product for just $600.
That said, despite its success, analysts warn that regulatory challenges and access to advanced chips may hinder the long-term growth of Chinese AI companies like DeepSeek. DeepSeek benefited from its founder stockpiling Nvidia chips before they became unavailable in China. To progress, they will need newer and better chips, which will be a challenge to acquire.
I have been trying to check DeepSeek out for myself, but the email verification system seems to be having issues. If you have tried it out, let us know what the experience is like.
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The Chinese are very good at counterfeiting. You produce something through investment and hardwork and all they do is to take that finished product, study it and add minor developments without the cost of starting from scratch. That’s why they can’t do anything meaningful without foreign technology
Despite my reservations for Chinese made products I am happy Trump is in a deep spot as he thinks he can control the world by starving them from getting American products. If the Chinese manage to make chips then he has it coming.
The DeepSeek R1 release is being contextualized against Stargate’s half a trillion bill. Investors are begining to question the wisdom of the whole project. The fact that DeepSeek opensourced everything, along with detailed instructions on how to reproduce their model, has shocked everyone, (….at least those in the industry).
Conspiracies have also emerged alleging that the Chinese are simply trolling the US. Psychological warfare.
The next four years are going to be pure unadultered drama for the US, unless the “orange” can keep his head, firmly on his shoulders.
China somehow always creates everything cheaper