China is disrupting the Artificial Intelligence (AI) market with its new free rollout. Startup DeepSeek has reportedly rolled out a free assistant it says uses lower-cost chips and less data, seemingly challenging a widespread bet in financial markets that AI will drive demand along a supply chain from chipmakers to data centres.
DeepSeek claims that its free, open-source large-language was developed in just two months at a cost of under $6 million. A very bold claim as it directly challenges the expense claimed by their competitors in the west.
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The AI model was launched in late December in 2024 but the app has been the U.S. Apple App Store’s top-rated free app and sparked widespread debate among global competitors.
This cheap-to-develop and freely-distributed model is raising questions in the western markets about the money poured into AI development in the west.
“DeepSeek clearly doesn’t have access to as much compute as U.S. hyperscalers and somehow managed to develop a model that appears highly competitive,” Srini Pajjuri, semiconductor analyst at Raymond James, said in a note Monday.
Analysts at Citi said DeepSeek’s large-language model had “prompted investor inquiries
around cost of compute.”
Meta’s AI Chief Yann LeCunn took to LinkedIn to say that DeepSeek was a product of open-source platforms: “DeepSeek has profited from open research and open source (e.g. PyTorch and Llama from Meta.) They came up with new ideas and built them on top of other people’s work. Because their work is published and open source, everyone can profit from it. That is the power of open research and open source.”
If China succeeds in developing a cheap and free open-source AI model, it could have significant global implications. First, it could democratize access to advanced AI technologies, making them more available to researchers, businesses, and governments worldwide, especially in developing countries that lack the resources for expensive AI solutions. This could accelerate innovation and the development of new applications across industries like healthcare, education, and logistics.
However, it could also increase competition with western AI companies, particularly in areas of data privacy, security, and ethics. China’s leadership in AI could allow it to set global standards for the technology, influencing how AI is regulated and deployed internationally.
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Additionally, the open-source nature could lead to concerns over misuse, as anyone can access and potentially exploit powerful AI for malicious purposes.
In the long term, it could shift the balance of technological power and reshape the global AI landscape.