Why Silicon Valley is blown away by Chinese AI app DeepSeek BREAKING NEWS!

HONG KONG — An artificial intelligence lab in China has become the latest front in the U.S.-China rivalry, raising doubts as to how much — and for how much longer — the United States is in the lead in developing the strategically key technology.

The Chinese startup DeepSeek has made waves after releasing AI models that experts say match or outperform leading American models at a fraction of the cost. The meteoric rise of the previously little-known company spooked U.S. investors Monday, wiping out almost $600 billion in the market value of American chipmaker Nvidia in the biggest drop in the nation's market history.

In China, DeepSeek is being heralded as a symbol of the country’s AI advancements in the face of U.S. export restrictions that Beijing says are aimed at suppressing its technological development.

“This jaw-dropping breakthrough has come from a purely Chinese company,” said Feng Ji, founder and chief executive of Game Science, the developer behind the hit video game Black Myth: Wukong.

“DeepSeek may be a national-level technological and scientific achievement,” he wrote in a post on the Chinese social media platform Weibo.

Zhou Hongyi, co-founder of the Chinese cybersecurity firm Qihoo 360, said China would “undoubtedly come out on top” in the U.S.-China AI race.

“If we are to counter America’s AI tech dominance, DeepSeek will definitely be a key member of China’s ‘Avengers team,’” he said in a video on Weibo.

So how did a little-known startup become a global AI sensation?

Based in the Chinese tech hub of Hangzhou, DeepSeek was founded in 2023 by Liang Wenfeng, who is also the founder of a hedge fund called High-Flyer that uses AI-driven trading strategies.

Liang has said High-Flyer was one of DeepSeek’s investors, though it’s unclear how much it contributed, as well as a source of some of its first employees.