DeepSeek: Chinese AI firm making waves in Silicon Valley

Chinese firm DeepSeek's artificial intelligence chatbot has soared to the top of the Apple Store's download charts, stunning industry insiders and analysts with its ability to match its US competitors.

The program has shaken up the tech industry and hit US titans including Nvidia and Meta, which has spent vast sums of cash to get ahead in the fast-developing AI sector.

Here's what you need to know about DeepSeek:

Top performer

DeepSeek was developed by a startup based in the eastern Chinese city of Hangzhou, known for its high density of tech firms.

Available as an app or on desktop, DeepSeek can do many of the things that its Western competitors can do — write song lyrics, help work on a personal development plan, or even write a recipe for dinner based on what's in the fridge.

It can communicate in multiple languages, though it told AFP that it was strongest in English and Chinese.

From writing complex code to solving difficult sums, industry insiders have been astonished by just how well DeepSeek's abilities match the competition.

"What we've found is that DeepSeek... is the top performing, or roughly on par with the best American models," Alexandr Wang, CEO of Scale AI, told CNBC.

That's all the more surprising given what is known about how it was made.

In a paper detailing its development, the firm said the model was trained using only a fraction of the chips used by its Western competitors.

'Sputnik moment'?

DeepSeek said they spent only US$5.6 million developing their model — peanuts when compared with the billions US tech giants have poured into AI.

Shares in major tech firms in the US and Japan have tumbled as the industry takes stock of the challenge from DeepSeek.

Chip-making giant Nvidia — the world's dominant supplier of AI hardware and software — closed down more than 3 percent on Wall Street on Friday.

And Japanese firm SoftBank, a key investor in US President Donald Trump's announcement of a new US$500 billion venture to build infrastructure for artificial intelligence in the United States, lost more than 8 percent Monday.

Venture capitalist Marc Andreessen, a close adviser to Trump, described it as "AI's Sputnik moment" — a reference to the Soviet satellite launch that sparked the Cold War space race.

"DeepSeek R1 is one of the most amazing and impressive breakthroughs I've ever seen," he wrote on X.

Open source model

Like its Western competitors Chat-GPT, Meta's Llama and Claude, DeepSeek uses a large-language model — massive quantities of texts to train their everyday language use.

But unlike Silicon Valley rivals, who have developed proprietary LLMs, DeepSeek is open source, meaning anyone can access the app's code, see how it works and modify it themselves.

"We are living in a timeline where a non-US company is keeping the original mission of OpenAI alive — truly open, frontier research that empowers all," Jim Fan, a senior research manager at Nvidia, wrote on X.

DeepSeek said it "tops the leaderboard among open-source models" — and "rivals the most advanced closed-source models globally."

Scale AI's Wang wrote on X that "DeepSeek is a wake-up call for America."