• DeepSeek, the Chinese AI assistant launched in early 2025, initially disrupted the market by rivaling ChatGPT at a fraction of the cost.
  • The company claimed a development cost of only $5.6 million, contrasting sharply with OpenAI's $5 billion investment.
  • This release triggered a 'Sputnik moment,' causing American tech giants to lose over $1 trillion in market value.
  • However, the initial excitement has waned due to delays in releasing the DeepSeek R2 model, originally scheduled for May.

Quick Summary

DeepSeek emerged as a major disruptor in the artificial intelligence sector in early 2025. The Chinese company launched an assistant capable of competing with ChatGPT but at a significantly lower cost. The release caused a massive ripple effect, leading to a loss of over $1 trillion in market value for major American technology firms. This event was dubbed the "momento Sputnik," drawing parallels to the surprise of the 1957 satellite launch.

Despite this initial success, DeepSeek is currently facing significant headwinds. The company has delayed the release of its next-generation model, DeepSeek R2, which was originally expected in May. Furthermore, allegations surfaced in December suggesting the company utilized restricted Nvidia Blackwell chips for training, despite US export bans. While DeepSeek remains a low-cost alternative to Western AI, its growth has slowed, and it has failed to maintain the search dominance it achieved shortly after its launch.

The Rise and Stumble of a New Competitor

DeepSeek entered the market with significant momentum. The application launched on January 20, and within a week, it occupied the top spot on the Apple App Store rankings. The tool was viewed as a capable rival to ChatGPT, offering similar performance metrics but with a drastically reduced price tag.

According to the company's developers, the total cost to build DeepSeek was only US$ 5.6 million. This stands in stark contrast to the resources deployed by American competitors; OpenAI reportedly invested US$ 5 billion in ChatGPT during 2024. Despite this efficient engineering, DeepSeek has struggled to retain the same level of user interest. Data from Google Trends indicates that while search interest spiked immediately after the launch, the company could not sustain the momentum. Today, it has not reached the same level of interest as ChatGPT.

Although this smuggling seems unlikely, we investigate any information we receive.
— Nvidia Representative

Delays and Internal Dissatisfaction 📉

One of the primary factors contributing to DeepSeek's slowing momentum is the delay of its next major release. The DeepSeek R2 model, the successor to the current assistant, was scheduled for a public release in May. However, the launch was postponed.

The delay was reportedly driven by internal quality control. Liang Wenfeng, the CEO of DeepSeek, was said to be unsatisfied with the model's performance. Additionally, the company faces structural challenges compared to its rivals. DeepSeek operates with a smaller infrastructure, particularly regarding the hardware used to train these complex systems. This limitation may be contributing to the slower development cycle compared to larger American firms.

Geopolitical Tensions and Chip Allegations 🇺🇸

DeepSeek has also become entangled in the geopolitical battle over advanced technology. In early December, reports alleged that the company was using the Nvidia Blackwell chip for AI training. The United States has banned the export of this specific chip to China due to the ongoing AI race.

Nvidia responded to these allegations by stating they had no proof their chips were being diverted. A company representative stated, "Although this smuggling seems unlikely, we investigate any information we receive." In a related development, US President Donald Trump indicated he would authorize Nvidia to sell the H200 chip to China. The H200 is an older model, roughly 18 months behind the most advanced technology, but sales would be permitted only for "approved clients" under strict national security conditions.

Market Impact and Future Outlook

The launch of DeepSeek is widely regarded as a pivotal moment in the AI industry. The event caused American tech giants to lose more than $1 trillion in market value, a shock compared to the 1957 launch of the Soviet satellite Sputnik. However, the question of "which AI is best" remains open. While DeepSeek proved that high-performance models can be built cheaply, its inability to release the R2 on time and the scrutiny over its hardware supply chain have stalled its progress. The company must now navigate strict US regulations and internal performance standards to regain its early 2025 form.

Frequently Asked Questions

Why did DeepSeek delay its R2 model?

DeepSeek delayed the R2 model because CEO Liang Wenfeng was unsatisfied with the performance of the system.

What is the 'Sputnik moment' mentioned in the article?

It refers to the shock felt by American tech companies when DeepSeek's launch caused them to lose over $1 trillion in market value, similar to the surprise caused by the Soviet satellite launch in 1957.

Is DeepSeek using banned chips?

Reports alleged that DeepSeek used the banned Nvidia Blackwell chip. Nvidia stated they have no proof of this but are investigating.