A Chinese AI company that rivals ChatGPT, is gaining attention in Silicon Valley with its rapid rise, nearly outperforming leading American AI companies like OpenAI and Meta.
DeepSeek is a Chinese AI startup that develops open-source large language models (LLMs), according to the company’s website.
On January 20, the company introduced DeepSeek-R1, a specialized model designed for complex problem-solving. According to the Wall Street Journal, R1 quickly surged into the global top 10 for performance, achieving this feat with fewer, less powerful AI chips and at a significantly lower cost compared to U.S. models.
What is DeepSeek?
Founded in 2023 by Liang Wenfeng, co-founder of AI-driven hedge fund High-Flyer, DeepSeek emerged from the fund’s AI research unit to focus on large language models and artificial general intelligence (AGI). Backed and wholly owned by High-Flyer, the startup gained attention with its open-source reasoning model, R1, which rivals OpenAI’s offerings. Since its release, R1 has soared to the top of app stores and industry leaderboards, earning acclaim for its performance and reasoning capabilities.
“AI’s Sputnik moment”
“Deepseek R1 is one of the most amazing and impressive breakthroughs I’ve ever seen,” Marc Andreessen, a Silicon Valley venture capitalist who has been advising Trump, wrote in a post on X. “And as open source, a profound gift to the world.”
“DeepSeek R1 is AI’s Sputnik moment,” Andreessen wrote in a comment. The latest version of the app was announced on President Donald Trump’s Inauguration Day, coinciding with headlines surrounding the potential U.S. ban of another Chinese-owned social media app, TikTok.
OpenAI CEO Sam Altman is also impressed. Altman said the new R1 was “an impressive model, particularly around what they’re able to deliver for the price.” He wrote on X that: “We will obviously deliver much better models and also it’s legit invigorating to have a new competitor!” adding that “We will pull up some releases.”
Nat Friedman, the former CEO of Github, similarly posted: “The deepseek team is obviously really good. China is full of talented engineers. Every other take is cope. Sorry.”
Others sounded alarm. Alexandr Wang, CEO of San Francisco-based Scale AI, also weighed in on DeepSeek’s rapid success, calling it a “wake-up call for America.”
“DeepSeek is a wake up call for America, but it doesn’t change the strategy,” Wang wrote in a post on X. Wang explained that the “USA must out-innovate & race faster, as we have done in the entire history of AI” and “tighten export controls on chips so that we can maintain future leads.” “Every major breakthrough in AI has been American,” Wang said.
While DeepSeek’s flagship model is available for free, the company charges users who integrate their own applications with DeepSeek’s model and computing infrastructure, according to the Wall Street Journal.
Meta’s Chief AI Scientist, Yann LeCun, said he was impressed by DeepSeek’s rapid success, highlighting that the real value lies in keeping AI models open-source, allowing everyone to benefit, rather than focusing on the threat posed by Chinese competition. “It’s not that China’s AI is ‘surpassing the US,’ but rather that ‘open source models are surpassing proprietary ones,’” LeCun explained.
“DeepSeek has profited from open research and open source (e.g. PyTorch and Llama from Meta) They came up with new ideas and built them on top of other people’s work,” LeCun continued. “Because their work is published and open source, everyone can profit from it. That is the power of open research and open source.”
Meanwhile, Meta CEO Mark Zuckerberg revealed plans to invest over $60 billion in 2025, emphasizing the company’s commitment to AI. This move is part of Meta’s strategy to strengthen its position against rivals OpenAI and Google in the competitive AI race.
DeepSeek dethrones ChatGPT on App Store
On Monday, DeepSeek took over rival OpenAI’s coveted spot as the most-downloaded free app in the U.S. on Apple ’s App Store, dethroning ChatGPT.
At the same time, global tech stocks sold off and were on pace to wipe out billions in market cap. Shares of Nvidia, the chip designer, fell nearly 17% on Monday by market close, with chipmaker ASML down nearly 6%. T
Following the momentum, DeepSeek-related stocks rallied strong on Monday’s opening with multiple stocks opening more than 10 percent higher.
Later on Monday, DeepSeek said it would temporarily limit user registrations “due to large-scale malicious attacks” on its services, though existing users will be able to log in as usual.