The DeepSeek phenomenon: How one AI model is changing China's tech landscape

Chinese artificial intelligence star DeepSeek has sparked a frenzy following the Spring Festival holiday. Tech giants, including Huawei, Lenovo and Tencent, are rushing to embrace the low-cost and high-performance AI models, while shares for related sectors, from chips, AI applications, cloud to online security, surged on two consecutive trading days through Thursday.

By the end of January, the DeekSeek chatbot had soared to the top of the Apple Store's download charts. More importantly, the Hangzhou-based developer said the model was trained with only a fraction of the chips used by its Western competitors and is likely to surpass ChatGPT developer OpenAI. DeepSeek was regarded as a "turning point" or "AI's Sputnik moment" – a reference to the Soviet satellite launch that sparked the Cold War space race.

DeepSeek frenzy in China

Reports on Thursday of DeepSeek's high-salary recruitment efforts suggest the momentum is continuing. Its low-cost, high-performance, and open-source nature is seen as crucial for China's efforts to reduce reliance on US-made AI chips, particularly those from Nvidia, which face increasingly strict United States export controls.

Industry insiders believe DeepSeek's technological advancements could enable China to close the gap in the global AI race, despite challenges related to chip access and computing power.

"DeepSeek disrupts existing AI paths. The rapid decline threshold and cost of AI innovation will inspire the whole ecosystem," said Qi Xiangdong, chairman of security giant Qi-Anxin. He also emphasized that AI's development should not be dominated by superpower companies alone.

Even during the Chinese New Year holiday in China, Huawei and Tencent announced support for DeepSeek models for developers, by combining cloud services and other infrastructure. Qi-Anxin has integrated DeepSeek into its tools for detecting security threats for enterprise users. For consumers, Huawei announced it was offering DeepSeek-powered services in its HarmonyOS Next system tool while Lenovo has integrated DeepSeek's abilities in its new AI personal computers, Shanghai Daily learned.

Huawei's HarmonyOS is being used in over 900 million devices across phones, smart devices and cars, while 43 percent of PCs sold in 2025 will be AI PCs, meaning DeepSeek will soon be used by more consumers.

Investors bet on DeepSeek

DeepSeek, with optimized cost and technology innovation, will greatly push the development of AI applications and AI-enabled devices in the future. AI will be widely and more quickly adopted in sectors like education, e-governance, finance, marketing, medical and transportation sectors, according to Sealand Securities, a financial services company.

A-share investors seem optimistic about the "DeepSeek Moment."

Several dozen shares from chip makers, cloud service providers, PC makers and cybersecurity service providers surged on Wednesday and Thursday, fueled by the DeepSeek wave.

Cloud service providers QingCloud and UCloud both surged to hit the 20 percent daily cap on the two days.

QingCloud's CoresHub released DeepSeek's text-to-image generation service during the Spring Festival. It brings private cloud AI services for developers and enterprises, providing easy access to AI use.

DeepSeek's support has brought new customers in recent days and the company has temporarily added server resources, QingCloud told Shanghai Daily.

Hygon Information Technology, a major Chinese chip developer, has integrated DeepSeek's V3 and R1 models with its Deep-learning Computing Unit (DCU). The more affordable and safer AI models will push the development and popularity of AI in China, according to Hygon. On the two trading days, STAR-listed Hygon Information surged 9.38 percent.

DeepSeek garners international recognition

DeepSeek is also gaining support from global tech giants.

Microsoft and Amazon's cloud services, the world's top two public service providers, have started offering DeepSeek models.

Former Google CEO Eric Schmidt described DeepSeek's rise as "a turning point." He emphasized that China's ability to compete with Big Tech using fewer resources demonstrates the need for the US to intensify its open-source AI efforts.

Like its Western competitors ChatGPT, 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, DeepSeek is open-source, meaning anyone can access the app's code, see how it works and modify it themselves.

Therefore, DeepSeek is being welcomed by individual developers and startups globally, according to media reports.