A new Chinese AI app tops the App Store, but its meteoric rise could be short-lived

AppleInsider

Chinese AI app DeepSeek is on top of the App Store, challenging Apple Intelligence, and shaking Wall Street confidence in big tech.

DeepSeek logo

The market for generative AI is already dominated by a few major names in the West, with Apple Intelligence alongside Google Gemini and OpenAI's ChatGPT. While there are many smaller efforts to offer AI services, one has seemingly come out of nowhere in a surge of popularity.

Called DeepSeek, it's an app that has leaped to the top of the U.S. App Store, as well as many other countries, in a very short space of time. Following the release of its LLM one week ago, it has seen massive growth in a short space of time.

It has already been heralded as a milestone in AI. However, just as quickly as it became a major event in AI, it may just as easily disappear from view.

Rapid launch, cheaper product

DeepSeek is a chat app in a similar vein to ChatGPT. You can ask it questions and to perform tasks, and it will use its large language model (LLM) to offer a response.

This is practically what ChatGPT and other competitors offer users, and isn't massively transformative on its own. However, the circumstances behind it are more interesting.

DeepSeek-V3, the LLM, was officially released in December, with a mobile app introduced just one week ago by the Chinese AI company. That app uses R1, a reasoning model that is based on V3.

However, the LLM was released as an open source model, instead of being a proprietary model. Due to the U.S. limiting the shipments of AI chips to China, developers had to work on alternative ways to not only train models, but also to perform the actual queries.

This necessitated collaboration between development teams, which led to the open-source LLM's development. It's a model that anyone can download, including from Hugging Face.

With limited hardware, it had to pull off some new tricks to be as resource-efficient as it can. This included analyzing the query to only use relevant parts of the LLM itself, cutting processing costs considerably.

These limitations were also affected by the team having a considerably smaller budget than typical AI projects cost in the West. It allegedly cost DeepSeek just $5.58 million to train the model, reports The Register.

Bearing in mind Microsoft's billion-dollar investments into OpenAI and the U.S. government's $500 billion Stargate AI project, DeepSeek's development is a drop in the ocean.

DeepSeek's big splash

The sudden massive popularity of DeepSeek has been felt by the money markets, stunned by a newcomer that could feasibly offer ChatGPT responses for minimal cost. The shares of major AI companies have been badly hit in the face of a cheaper, faster rival competing against well-heeled projects.

Most affected was chip maker Nvidia, which saw its shares dip at a peak of 17 percent on Monday, reports the BBC. The incident wiped more than $600 billion in share value in one day alone.

Other tech companies also saw their shares affected, including Microsoft and Meta. Apple, meanwhile, seems largely unaffected by the news.

It is likely that Nvidia was hit the most due to it being a supplier of high-priced hardware used for machine learning purposes. With a model demonstrating training can be efficiently done with minimal resources, it means there could be less reliance on Nvidia's chips in the future.

Denial of service attack

While popularity is often a great thing for business, sometimes the attention can cause problems. In the case of DeepSeek, it's from a suspected distributed denial of service (DDoS) attack.

A note on the status page advises that "large-scale malicious attacks on DeepSeek's services" is underway. To try and counter the problem, and to limit its impact on new users, DeepSeek has limited the registration of new accounts temporarily.

For the moment, only users in China with an +86 country code phone number can sign up for a new account. Existing users who already have an account can continue using it without issue.

It is likely that DeepSeek will keep the limitation in play until it can mitigate the DDoS, or if the attack eventually dies down.

The risk of China

The impact of DeepSeek cannot be ignored by the AI industry as a whole. Indeed, tech investor Marc Andreessen referred to it as "AI's Sputnik moment," with US efforts blindsided by an AI produced in a rival superpower.

However, as history has shown, it's likely that DeepSeek will have a bumpy ride in the United States and in the West in general.

The United States is very wary of Chinese developments, especially in the tech field. With claims of national security issues at risk, the United States has already diminished Huawei's presence in the West, leaving it to be a major force in its home country.

Then there's the constant battle over TikTok. While current events may see it rescued from a ban in the U.S., the entire issue stemmed from the U.S. deeming it a potential security risk to consumers.

It's likely that, if DeepSeek sticks around and stays extremely prominent, the U.S. government may become interested. When that happens, it's likely that there will be accusations of it being a security risk, calls for investigations, and possible bans too.

Even if that occurs, DeepSeek may have already inflicted enough damage on the West's AI efforts, simply by demonstrating that it can be done in cheaper ways, without significant hardware acquisition or ongoing running costs.



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tht

This "AI as a WMD" narrative has been crazy. It's basically a programming technique, not some difficult to make weapon of massive destruction whose materials can be controlled. That is, it's not a material thing that could be controlled. Its benefits are so overhyped it has warped everyone's rationality.

pema

Once again the Chinese have upended the market. This time with AI. The whole Western model has been debunked.
Kind of reminds me of the 1990s when Oracle and other big name tech titans committed to spend trillions to create the information superhighway with the mantra the first and best would control it. When a little canary in the coal mine tweeted 'hey we have just such a model an it costs nada' it is called the internet and it was invented in the 70s as ARPANET bringing the whole proposed model crashing down. And the rest is history as they say. 
The reason that the Western model is unwieldily is the gargantuan amounts of data and the nuclear processing power required to deliver even a smidgen of info that it becomes like the Russian wristwatch: a clunky face with a car battery required to run it. Not to mention the fact that the smidgen of data is woefully inadequate and wrong most of time. 

China is the future: manufacturing, EV and now AIs. 

daalseth

the U.S. government may become interested. When that happens, it's likely that there will be accusations of it being a security risk, calls for investigations, and possible bans too.

Because competing against the world on a level playing field is just something then US doesn’t do anymore. 

9secondkox2

By now, AI is a known quantity. Reverse engineering and IP theft are not new either. This is just the tip of the proverbial "iceberg" as relates to an incoming swarm of products / services like this. yawn. China is not new to knockoffs, software included. AI is no different. Easy to develop something rapidly when you're copying the work of pioneers who put much of their lives into the work. Should software controlled by a hostile nation be on American's devices? It's an interesting question. But outside of government officials, members of the military, or those with security credentials, probably not too big a concern. But it's worth investigating. It's not like we didn't just have the chinese surveilance devices surveying our nation from the air last year. The less information an adversarial nation has on another nations citizens, the better. It may not be a WMD or whatever, but it's definitely not something to be dismissed.

mikethemartian

Nvidia was crushed.

pema

9secondkox2 said:

By now, AI is a known quantity. Reverse engineering and IP theft are not new either. This is just the tip of the proverbial "iceberg" as relates to an incoming swarm of products / services like this. yawn. China is not new to knockoffs, software included. AI is no different. Easy to develop something rapidly when you're copying the work of pioneers who put much of their lives into the work. Should software controlled by a hostile nation be on American's devices? It's an interesting question. But outside of government officials, members of the military, or those with security credentials, probably not too big a concern. But it's worth investigating. It's not like we didn't just have the chinese surveilance devices surveying our nation from the air last year. The less information an adversarial nation has on another nations citizens, the better. It may not be a WMD or whatever, but it's definitely not something to be dismissed.

I am not so sure about this. 

Recall how back in the late 60s and early 70s we used to mock the Japanese, especially their cars. And then gradually they upended the industry and forced us to up our game, in cars, electronics and cameras.

I would not suggest that the Chinese are ripping anyone off, it is just that they are doing it the smart way and we are doing it the hard and unwieldily way. 

Much as Mr Trump wants to make America great again and resurrect the American Empire, going forward it is going to be the Chinese Empire. 

You only need to read books like 'The Rise and Fall of the Roman Empire (Gibbons)' or Barbarians at the Gate and realise what's happening with the US. We have become fat and lazy; too much booze and too many drugs; let our guard down at our borders which is exactly what happened with the almighty Romans. 

The Chinese have captured the EV market; they have sown up the manufacturing of just about everything and now they are showing us how AI is done. Marc Andreessen of Mosaic fame calls this the 'Sputnik' moment. When the Russians orbited the earth before we even knew how to build rockets. 

It forced us (remember JFK's famous speech) to wake up, commit billions of dollars, create NASA and land on the moon in 1969. 

Perhaps Trump and this event will force us to wake up and take the reins and rise up out of the ashes or we will continue to sink into oblivion: a nation of lazy drug users who can't get their game together. Our problem is not that we have too many undocumented migrants. Even if we round up and evict every single one of them it won't restore our boldness, vision and greatness. 

That's what is happening here. Blaming the Chinese for stealing our IP is just nonsense and short viewed. 

mikethemartian

Pema said:

9secondkox2 said:

By now, AI is a known quantity. Reverse engineering and IP theft are not new either. This is just the tip of the proverbial "iceberg" as relates to an incoming swarm of products / services like this. yawn. China is not new to knockoffs, software included. AI is no different. Easy to develop something rapidly when you're copying the work of pioneers who put much of their lives into the work. Should software controlled by a hostile nation be on American's devices? It's an interesting question. But outside of government officials, members of the military, or those with security credentials, probably not too big a concern. But it's worth investigating. It's not like we didn't just have the chinese surveilance devices surveying our nation from the air last year. The less information an adversarial nation has on another nations citizens, the better. It may not be a WMD or whatever, but it's definitely not something to be dismissed.

I am not so sure about this. 

Recall how back in the late 60s and early 70s we used to mock the Japanese, especially their cars. And then gradually they upended the industry and forced us to up our game, in cars, electronics and cameras.

I would not suggest that the Chinese are ripping anyone off, it is just that they are doing it the smart way and we are doing it the hard and unwieldily way. 

Much as Mr Trump wants to make America great again and resurrect the American Empire, going forward it is going to be the Chinese Empire. 

You only need to read books like 'The Rise and Fall of the Roman Empire (Gibbons)' or Barbarians at the Gate and realise what's happening with the US. We have become fat and lazy; too much booze and too many drugs; let our guard down at our borders which is exactly what happened with the almighty Romans. 

The Chinese have captured the EV market; they have sown up the manufacturing of just about everything and now they are showing us how AI is done. Marc Andreessen of Mosaic fame calls this the 'Sputnik' moment. When the Russians orbited the earth before we even knew how to build rockets. 

It forced us (remember JFK's famous speech) to wake up, commit billions of dollars, create NASA and land on the moon in 1969. 

Perhaps Trump and this event will force us to wake up and take the reins and rise up out of the ashes or we will continue to sink into oblivion: a nation of lazy drug users who can't get their game together. Our problem is not that we have too many undocumented migrants. Even if we round up and evict every single one of them it won't restore our boldness, vision and greatness. 

That's what is happening here. Blaming the Chinese for stealing our IP is just nonsense and short viewed. 

I should read Gibbons one day.

anilu_777

If you can’t compete, ban. That’s not the way to innovate. 

stabitha_christie

9secondkox2 said:

By now, AI is a known quantity. Reverse engineering and IP theft are not new either. This is just the tip of the proverbial "iceberg" as relates to an incoming swarm of products / services like this. yawn. China is not new to knockoffs, software included. AI is no different. Easy to develop something rapidly when you're copying the work of pioneers who put much of their lives into the work. Should software controlled by a hostile nation be on American's devices? It's an interesting question. But outside of government officials, members of the military, or those with security credentials, probably not too big a concern. But it's worth investigating. It's not like we didn't just have the chinese surveilance devices surveying our nation from the air last year. The less information an adversarial nation has on another nations citizens, the better. It may not be a WMD or whatever, but it's definitely not something to be dismissed.

This is such an insanely bad take I have to question if it was meant to be satire  

Seriously, tell us you don’t know what open sourced software is without saying “I don’t know what open sourced software is.”  This is covered under the MIT license so it’s  not “controlled by hostile nation”.  Users can download it, change it and even include it proprietary software

The license itself makes it a fairly big deal. The other thing is getting it to run on lower end hardware. Your claim that whipping this up is somehow easy because other LLMs exist is just nonsense. If OpenAI, Microsoft, Google and Meta could get their models to run on cheaper gear, they would. All of them are spending a ton on data centers and trying to figure out how to power said data centers. This level of efficiency would be a boon for them. 

The irony here is that it is the U.S embargo on higher end NVIDIA chips that created the environment where this happened. The Chinese developers had  less to work with and figured it out. This is what actual innovation looks like. Similar to how Woz figured out how to make the Apple II from consumer parts.

Anyway, the source code is freely available. Please, point to the portions that are stolen IP or reverse engineered  

We shall wait patiently for your response. 

tht

mikethemartian said:

Pema said:

9secondkox2 said:

By now, AI is a known quantity. Reverse engineering and IP theft are not new either. This is just the tip of the proverbial "iceberg" as relates to an incoming swarm of products / services like this. yawn. China is not new to knockoffs, software included. AI is no different. Easy to develop something rapidly when you're copying the work of pioneers who put much of their lives into the work. Should software controlled by a hostile nation be on American's devices? It's an interesting question. But outside of government officials, members of the military, or those with security credentials, probably not too big a concern. But it's worth investigating. It's not like we didn't just have the chinese surveilance devices surveying our nation from the air last year. The less information an adversarial nation has on another nations citizens, the better. It may not be a WMD or whatever, but it's definitely not something to be dismissed.

I am not so sure about this. 

Recall how back in the late 60s and early 70s we used to mock the Japanese, especially their cars. And then gradually they upended the industry and forced us to up our game, in cars, electronics and cameras.

I would not suggest that the Chinese are ripping anyone off, it is just that they are doing it the smart way and we are doing it the hard and unwieldily way. 

Much as Mr Trump wants to make America great again and resurrect the American Empire, going forward it is going to be the Chinese Empire. 

You only need to read books like 'The Rise and Fall of the Roman Empire (Gibbons)' or Barbarians at the Gate and realise what's happening with the US. We have become fat and lazy; too much booze and too many drugs; let our guard down at our borders which is exactly what happened with the almighty Romans. 

The Chinese have captured the EV market; they have sown up the manufacturing of just about everything and now they are showing us how AI is done. Marc Andreessen of Mosaic fame calls this the 'Sputnik' moment. When the Russians orbited the earth before we even knew how to build rockets. 

It forced us (remember JFK's famous speech) to wake up, commit billions of dollars, create NASA and land on the moon in 1969. 

Perhaps Trump and this event will force us to wake up and take the reins and rise up out of the ashes or we will continue to sink into oblivion: a nation of lazy drug users who can't get their game together. Our problem is not that we have too many undocumented migrants. Even if we round up and evict every single one of them it won't restore our boldness, vision and greatness. 

That's what is happening here. Blaming the Chinese for stealing our IP is just nonsense and short viewed. 

I should read Gibbons one day.

You probably shouldn’t. I suppose you should, but read someone else as well. Gibbon blamed the fall of the Roman Empire on the rise of Christianity, trying to make the case that Romans didn’t have its zeal or vitality because of it. As soon as you hear words like vitality or zeal in an explanation, that’s psychobabble or bullshit territory. 

Then, of course, the whole thing about western Rome being “Rome” and western education ignoring Eastern Rome as the Byzantine empire and not “Rome”. Gibbon was only thinking about Latin Rome, while Greek Rome went to 1453. Puts the whole “Fall of Rome” narrative into a different light if Rome didn’t fall for another 1000 years. 

Me? If you have to say why did the Mediterranean spanning Roman empire fall, I put the blame squarely on Diocletian. 

edited January 27

suntanironman

Anilu_777 said:

If you can’t compete, ban. That’s not the way to innovate. 

I mean… it worked for China.

Google, Facebook, Twitter, YouTube, Netflix, etc. were prevented from operating in China (without extensive government restrictions). And that allowed home-grown Chinese companies to invest and innovate (… and occasionally steal foreign intellectual property…) in the vacuum (Baidu, Tencent, Alibaba, iQIYI, and so on).

steve2

The market for generative AI is already dominated by a few major names in the West, with Apple Intelligence alongside Google Gemini and OpenAI's ChatGPT.

I reading "Apple Intelligence" along this line.

avon b7

"The United States is very wary of Chinese developments, especially in the tech field. With claims of national security issues at risk, the United States has already diminished Huawei's presence in the West, leaving it to be a major force in its home country."

I will qualify this somewhat. 

Huawei's handset presence was diminished in the west.

There is also the question of what 'the West' is.

After US sanctions, Huawei had to de-Americanise and create new technologies and products. 

https://www.notebookcheck.net/Huawei-s-Magneto-Electric-Disk-technology-combines-SSD-speed-with-72-TB-tape-storage.917148.0.html

https://www.digitimes.com/news/a20231003PD200/china-east-asia-mobile+telecom-wireless-networking.html


That has happened at lightning speed and is now irreversible. It also entered the advanced automotive market and branched its cloud business out of its existing category and put it in its own division. It is one of the fastest growing areas of the company. 

https://www.lightreading.com/5g/huawei-is-starting-to-look-unstoppable

Yes, China is Huawei's core market but that is basically how it always was. 

Outside China most of its business segments still enjoy a growing presence (Power, Cloud, storage, wearables, industrial AI...). 

ICT and related products are doing well - in spite of sanctions - and there is a big push in Africa and South America too.

Of course, there is the Russian market as well. 

Trump may call DeepSeek a 'wake-up call' but one has to wonder when he will realise that Huawei's current and future growth worldwide (with the exception of the US) is through billions upon billions worth of products that are virtually devoid of US business interests and technologies.

All of those current and future products could have helped US technology interests yet Trump (and the hawks) all thought differently. 

And now there are even reports suggesting Huawei is readying to re-enter the global handset market (even though it never really left). 

https://www.moneycontrol.com/europe/?url=https://www.moneycontrol.com/technology/huawei-eyeing-to-re-enter-global-smartphone-market-with-in-house-chips-article-12914760.html&classic=true

edited January 28

blastdoor

Stabitha_Christie said:.

This is such an insanely bad take I have to question if it was meant to be satire  

Seriously, tell us you don’t know what open sourced software is without saying “I don’t know what open sourced software is.”  This is covered under the MIT license so it’s  not “controlled by hostile nation”.  Users can download it, change it and even include it proprietary software

The license itself makes it a fairly big deal. The other thing is getting it to run on lower end hardware. Your claim that whipping this up is somehow easy because other LLMs exist is just nonsense. If OpenAI, Microsoft, Google and Meta could get their models to run on cheaper gear, they would. All of them are spending a ton on data centers and trying to figure out how to power said data centers. This level of efficiency would be a boon for them. 

Totally this. 

Also, this isn’t bad for “the west” or anybody other than companies that hoped to make money off of proprietary models. For example, this is likely good news for Apple. 

The statement in the article about a ban is also really dumb. It shows zero understanding of what is and is not a potential threat. Tik Tok sends data on people back to China. DeepSeek’s model is just math. You can’t ban math even if you want to.

danox

Oak Ridge Tennessee is alive and well thru China, another Sputnik moment……

tundraboy

Anilu_777 said:

If you can’t compete, ban. That’s not the way to innovate. 

Facebook and Youtube are banned in China. Just saying.

macpro

I doubt the effect will be 'shorty lived.'  Regardless of DeepSeek's longevity, the point is, that AI can be done better and cheaper; that's all there is to it.  Not to mention it is opensource.

tundraboy

I think the market overreacted severely.  If the new programming techniques can match existing LLMs using less advanced chips.  Imagine what can be achieved using cutting edge chips.  It's not as if LLMs have already been perfected.  The last mile of development is usually the most difficult and most expensive.  Maybe cutting edge chips are needed to cross that last mile.

For example, I still don't trust AI generated summaries and shortcuts because they are still too prone to making up stuff.  AI hasn't solved the problem of how does an AI learn to distinguish what's true and not true, right and wrong?  Maybe going from 98% accurate to 99.999% accurate requires the most advanced AI chips, and lots of them.  I'm no expert, I don't know.  In fact nobody knows.

blastdoor

tundraboy said:

I think the market overreacted severely.  If the new programming techniques can match existing LLMs using less advanced chips.  Imagine what can be achieved using cutting edge chips.  It's not as if LLMs have already been perfected.  The last mile of development is usually the most difficult and most expensive.  Maybe cutting edge chips are needed to cross that last mile.

For example, I still don't trust AI generated summaries and shortcuts because they are still too prone to making up stuff.  AI hasn't solved the problem of how does an AI learn to distinguish what's true and not true, right and wrong?  Maybe going from 98% accurate to 99.999% accurate requires the most advanced AI chips, and lots of them.  I'm no expert, I don't know.  In fact nobody knows.

I think the market got it right with respect to Nvidia. Nvidia was vastly over-valued anyway, but the methodological innovations from deepseek seem to make Nvidia's advantages less relevant. In particular, they reduced the need for high speed interconnects across GPUs. They also greatly reduced the cost of inference, which means more inference can be done on devices -- like Apple's -- that have no Nvidia chips. 

The market got it dead wrong with respect to TSMC. This development is good news for TSMC because it means a wider diversity of firms can develop their own silicon for AI and be less dependent on Nvidia. Those firms then become customers of TSMC, cutting Nvidia out. It might even be good news for Intel, though Intel's board seems determined to sink the company.

AAPL actually went up yesterday and the market got that right, too. This is great news for Apple. It validates their approach to on-device computing and their unified memory architecture. It might even mean that they can use their own silicon for all of their AI needs, including training. 

macpro

blastdoor said:

tundraboy said:

I think the market overreacted severely.  If the new programming techniques can match existing LLMs using less advanced chips.  Imagine what can be achieved using cutting edge chips.  It's not as if LLMs have already been perfected.  The last mile of development is usually the most difficult and most expensive.  Maybe cutting edge chips are needed to cross that last mile.

For example, I still don't trust AI generated summaries and shortcuts because they are still too prone to making up stuff.  AI hasn't solved the problem of how does an AI learn to distinguish what's true and not true, right and wrong?  Maybe going from 98% accurate to 99.999% accurate requires the most advanced AI chips, and lots of them.  I'm no expert, I don't know.  In fact nobody knows.

I think the market got it right with respect to Nvidia. Nvidia was vastly over-valued anyway, but the methodological innovations from deepseek seem to make Nvidia's advantages less relevant. In particular, they reduced the need for high speed interconnects across GPUs. They also greatly reduced the cost of inference, which means more inference can be done on devices -- like Apple's -- that have no Nvidia chips. 

The market got it dead wrong with respect to TSMC. This development is good news for TSMC because it means a wider diversity of firms can develop their own silicon for AI and be less dependent on Nvidia. Those firms then become customers of TSMC, cutting Nvidia out. It might even be good news for Intel, though Intel's board seems determined to sink the company.

AAPL actually went up yesterday and the market got that right, too. This is great news for Apple. It validates their approach to on-device computing and their unified memory architecture. It might even mean that they can use their own silicon for all of their AI needs, including training. 

I grabbed a boatload of TSMC's stock when it plunged. It seems a lot of overreaction took place.