DeepSeek, a Chinese artificial intelligence (AI) tool, has become one of the most popular apps in the U.S., beating the chatbot from American firm OpenAI. DeepSeek was founded in Hangzhou in 2023, a year that saw increased AI innovation across China. While other Chinese companies have introduced large-scale AI models, DeepSeek is one of the only ones that has successfully broken into the U.S. market.
Chinese startup DeepSeek overtook ChatGPT to become the top-rated free application on Apple’s App Store in the U.S. on January. DeepSeek, a Chinese artificial intelligence (AI) tool, has become one of the most popular apps in the U.S., beating the chatbot from American firm OpenAI. OpenAI CEO Sam Altman has previously warned against Chinese control over the future of AI.
President Donald Trump recently announced the launch of Stargate, a Texas-based initiative that combines some of the leading figures in artificial intelligence in an attempt to keep the industry under U.S. control. Altman will play a major role in Stargate.
ChatGPT, which was previously the most popular AI chatbot on the market in the U.S., fell behind DeepSeek’s free app on Jan. 27, 2025, with the Apple App Store reporting that it was now the top-rated free app on the platform.
DeepSeek explicitly advertises itself on its website as “rivaling OpenAI’s Model o1,” making the clash between the two models all the more significant in the AI arms race. DeepSeek’s prominence came to light as the U.S. government continues to enforce export controls designed to restrict China’s access to advanced semiconductor technology critical for AI training.
These measures, expanded in 2021, are aimed at preventing Chinese firms from acquiring high-performance chips like Nvidia’s A100 and H100, often used for developing large-scale AI models.
However, researchers at DeepSeek stated in a recent paper that the DeepSeek-V3 model was trained using Nvidia’s H800 chips, a less advanced alternative not covered by the restrictions. They also reported training costs of less than $6 million. While some experts have questioned these claims, the report has raised questions about the effectiveness of current U.S. policies in curbing China’s AI advancements.
OpenAI CEO Sam Altman wrote in an op-ed published in 2024 by The Washington Post: “We face a strategic choice about what kind of world we are going to live in: Will it be one in which the United States and allied nations advance a global AI that spreads the technology’s benefits and opens access to it, or an authoritarian one, in which nations or movements that don’t share our values use AI to cement and expand their power?”
DeepSeek’s rise in popularity is expected to prompt a response from U.S. industry leaders, as well as the White House, which has taken a more proactive approach to AI under the new administration.
DeepSeek was founded in Hangzhou in 2023, a year that saw increased AI innovation across China. While other Chinese companies have introduced large-scale AI models, DeepSeek is one of the only ones that has successfully broken into the U.S. market.
DeepSeek AI, a rapidly emerging player in the artificial intelligence industry, is beginning to challenge U.S. control over the AI industry. Developed by the Chinese startup DeepSeek, the open-source AI chatbot has not only gained traction in China but has also captured the attention of global markets, including the U.S.
DeepSeek AI is the brainchild of Liang Wenfeng, a former hedge-fund manager who transitioned to AI development in 2023. The platform’s flagship model, DeepSeek-R1, was launched this January and quickly climbed to the top of the U.S. Apple App Store, surpassing ChatGPT in downloads.
DeepSeek’s appeal lies in its free-to-use model for consumers, underpinned by its R1 reasoning engine. This is said to integrate reinforcement learning to achieve high performance with minimal computational resources.
DeepSeek originated as Fire-Flyer, a branch of High-Flyer, Liang’s hedge fund. The progress of DeepSeek has partly been credited to the company’s unorthodox solutions to geopolitical challenges.
For example, U.S. export controls in October 2022 threatened to severely curtail Chinese development of AI. However, DeepSeek had stockpiled 10,000 of Nvidia’s H100 chips and used the stockpile to continue work, though the export controls remain a challenge, according to Liang.
Comparing DeepSeek AI to ChatGPT, the two are monetized very differently.
Unlike OpenAI, which charges $20 to $200 per month for its services, DeepSeek offers its platform for free to individual users and charges only $0.14 per million tokens for developers. This stark contrast has made DeepSeek popular with small businesses and developers.
DeepSeek-R1 claims to rival OpenAI’s o1 model in reasoning and mathematical problem-solving. The platform’s ability to generate Python code more effectively than ChatGPT has been a highlight in discussions among tech enthusiasts on communities like Reddit.
DeepSeek’s success in the U.S. market is attributed to its accessibility, cost-effectiveness, and high performance. On Reddit, users have praised the platform for its superior code-generation capabilities and its open-source ethos.
Billionaire investor Marc Andreessen described DeepSeek-R1 on X, formerly Twitter, as “a profound gift to the world.”
Liang, in an interview with technology news website Asia Tech Review, emphasized his vision of making AI technology accessible to all. “This is about democratizing innovation,” Liang said.
China is increasingly seen as a formidable competitor to the U.S. Despite facing the export restrictions on advanced semiconductors, DeepSeek has managed to thrive by optimizing its resources. Its models were trained at a cost of $5.6 million, which is a fraction of what its Western counterparts spend.
The implications extend beyond the tech industry. As DeepSeek continues to gain traction, it poses a challenge to the continuation of U.S. dominance in AI, which President Donald Trump has made a key part of his new administration.
Korea’s benchmark KOSPI index slid below the 2,454 threshold on Feb. 3, as concerns mounted over the rise of Chinese AI startup DeepSeek and the U.S. Federal Reserve’s decision to keep interest rates unchanged.
The index hit an intraday low of 2,437.50, for the first time since one Month ago, Jan. 3, when it closed at 2,441.92.
The won weakened against the U.S. dollar, trading at 1,467.32 won per dollar, up 0.66% from the previous session. It marked the first time the currency crossed the 1,450 level since Jan. 18.
Foreign investors offloaded 1.09 trillion won ($870 million) worth of shares on the KOSPI and 23.1 billion won on the KOSDAQ. Semiconductor stocks, a key driver of the South Korean market, bore the brunt of the sell-off. DeepSeek’s reported ability to deliver ChatGPT-like performance using low-cost, low-power chips rattled the sector.
SK Hynix plunged 9.59% to 199,800 won, slipping below the 200,000 won mark. The stock initially dropped more than 10% and extended losses to 11.86% shortly after the market opened. The chipmaker, a supplier of high-performance HBM3E chips to Nvidia, faced sharp losses amid fears over DeepSeek’s competitive offerings.
Nvidia shares had fallen 17% on Wall Street amid similar concerns, triggering a global sell-off in AI-related semiconductor stocks. Hanmi Semiconductor, a peer of SK Hynix, declined 6.55% to 112,700 won. Other semiconductor stocks, including Techwing (-9.49%), DI (-6.36%), Advanced Process Systems (-7.29%), and Aoros Technology (-2.19%), also posted steep losses.
Companies previously buoyed by the AI boom also saw sharp declines. HD Hyundai Electric dropped 9.78%, Hyosung Heavy Industries fell 12.70%, and LS Electric slid 7.38%. GAON Cable and Cheil Electric were down 11.32% and 10.55%, respectively.
Samsung Electronics, which is less dependent on Nvidia’s supply chain and has a strong foothold in lower-cost chips, fared better, dipping 2.61% to 52,300 won.
Conversely, AI service providers NAVER and Kakao saw gains, rising 6.13% and 6.85%, respectively.
An official of KB Securities’ research center said the market volatility is likely a short-term reaction to DeepSeek’s rise and the impact on U.S. stocks. “While DeepSeek’s low-cost AI chips may disrupt the market in the near term, they also signify the expansion of the AI ecosystem, which could ultimately benefit semiconductor companies in the long run,” he said.★
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