• DeepSeek, a Chinese AI startup, gained global attention for its ChatGPT-rivaling AI assistant and a crippling cyberattack that forced it to limit new user registrations.
• The cyberattack caused outages, prompting DeepSeek to prioritize existing users while its app topped the U.S. App Store.
• DeepSeek achieved cutting-edge AI results at a fraction of the cost of U.S. giants, using Nvidia’s H800 chips and spending less than $6 million.
• U.S. tech stocks plummeted, with Nvidia losing $600 billion in market value, as fears grew over the U.S. losing its AI edge to China.
• DeepSeek’s rise is seen as a wake-up call for U.S. tech leadership, sparking debates over the effectiveness of export controls and the future of AI competition.

Chinese AI startup DeepSeek found itself at the center of global attention this week—first for its groundbreaking AI assistant that rivaled U.S. giants like ChatGPT, and then for a crippling cyberattack that forced it to temporarily limit new user registrations. The attack came on Monday, just as DeepSeek’s app soared to the top of Apple’s App Store in the U.S., marking a significant milestone in the intensifying AI race between the U.S. and China.

The cyberattack, described by DeepSeek as a “large-scale malicious attack,” caused intermittent outages on its website and app. The company quickly moved to limit new registrations to ensure existing users could continue accessing its services, according to an announcement on their website.

DeepSeek’s rise has been nothing short of meteoric. Founded in 2023 in Hangzhou, China, the startup has managed to develop an AI assistant that rivals OpenAI’s ChatGPT and Google’s Bard, but at a fraction of the cost. DeepSeek claims its latest large language model, powered by the DeepSeek-V3 and R1 models, was trained using Nvidia’s H800 chips — chips not subject to U.S. export bans — at a cost of less than $6 million. By comparison, U.S. tech giants are projected to spend trillions on AI development over the next decade.

The company’s low-cost, high-efficiency approach has sent shockwaves through Silicon Valley and Wall Street. “DeepSeek has taken the market by storm by doing more with less,” said Giuseppe Sette, president of AI market research firm Reflexivity. “This shows that with AI, the surprises will keep on coming in the next few years.”

Tech stocks tumble amid fears of U.S. losing ground

The news of DeepSeek’s success triggered a massive selloff in U.S. tech stocks, with Nvidia, the leading AI chipmaker, losing $600 billion in market value in a single day — the largest one-day loss in stock market history. Shares of other tech giants, including Oracle and ASML, also plummeted, dragging the Nasdaq down by 3%.

The selloff reflects growing concerns that the U.S. is losing its edge in the global AI race, despite stringent export controls on advanced chips to China. DeepSeek’s ability to achieve cutting-edge results with limited resources has raised questions about the effectiveness of these controls.

“This is AI’s Sputnik moment,” tweeted investor Marc Andreessen, referencing the Soviet Union’s 1957 satellite launch that shocked the U.S. into action during the Cold War.

A wake-up call for U.S. tech leadership

The timing of DeepSeek’s breakthrough couldn’t be more symbolic. Just last week, President Donald Trump announced a $500 billion AI initiative called “Stargate,” a collaboration between OpenAI, Softbank, and Oracle, aimed at securing U.S. dominance in AI. Trump called DeepSeek’s success a “wake-up call” for American companies, urging them to “be laser-focused on competing to win.”

However, some experts remain skeptical about DeepSeek’s long-term impact. “No U.S. Global 2000 company is going to use a Chinese startup like DeepSeek to launch their AI infrastructure,” said Wedbush Securities analyst Dan Ives.

DeepSeek’s rise — and the subsequent cyberattack — underscores the high-stakes competition in the AI sector. While the startup’s achievements have rattled U.S. markets and policymakers, they also highlight the unpredictable nature of technological innovation. As the U.S. and China continue to vie for supremacy in AI, it is clear that the race is far from over, and the stakes have never been higher.

For now, DeepSeek’s story serves as both a cautionary tale and a call to action for the U.S. tech industry. As the dust settles from Monday’s market turmoil, the world will be watching to see how America responds to this latest challenge from China.

Sources for this article include:

RT.com

Reuters.com

CBSNews.com

TheGuardian.com