DeepSeek’s AI Revolution Reshapes China’s Tech Industry Amid Global Disruptions

The rise of Chinese AI firm DeepSeek is shaking up not only global tech giants like OpenAI but also China’s own technology landscape. As the company’s influence spreads, some of China’s biggest firms – many of which have been developing their own AI chatbots – are now integrating DeepSeek’s open-source model into their services.

Earlier this month, Chinese telecom giant Huawei announced plans to run DeepSeek on its domestically produced Ascend processors, a move that analysts see as a potential turning point in China’s AI development. This shift signals that high-performance AI models may no longer be dependent on Nvidia’s most advanced chips.

“This partnership defies U.S. sanctions by proving China can achieve competitive AI performance using its own hardware and software, bypassing the need for Nvidia chips,” noted analysts at investment firm Bernstein.

Since 2022, the U.S. government has imposed export restrictions aimed at limiting China’s access to advanced semiconductor technology. However, the success of DeepSeek’s latest R1 AI model – developed at a fraction of the cost of rivals like OpenAI’s ChatGPT – has challenged the assumption that cutting off access to high-end chips would stifle China’s AI advancements.

Growing Industry Support

DeepSeek’s momentum has drawn backing from leading Chinese AI chipmakers, including Tencent-backed Enflame, Baidu’s Kunlunxin, Moore Threads, and Hygon Information Technology, all of whom have announced support for the firm.

Beyond chipmakers, major Chinese cloud service providers have rushed to adopt DeepSeek’s technology. Alibaba, Tencent, Baidu, and ByteDance – the parent company of TikTok – have made DeepSeek’s AI service available through their cloud platforms. Other major players, including Lenovo, Geely, and China’s three largest telecom operators, have also incorporated DeepSeek into their offerings.

According to Lian Jye Su, chief analyst at research firm Omdia, DeepSeek’s rapid adoption underscores its credibility. “It serves as recognition for open-source AI models. If your technology is good enough, major platforms will integrate it,” Su said.

While many of these Chinese tech giants have been developing their own large language models since ChatGPT’s launch in 2022, they are now embracing DeepSeek to attract more users to their platforms.

“In reality, making direct profits from AI models is difficult unless mature consumer and enterprise applications emerge,” Su explained.

A similar trend has played out in the U.S., where major firms like Nvidia, Microsoft, and Amazon have also shown interest in DeepSeek’s capabilities.

A New AI Leader Emerges

Founded in 2023 and based in Hangzhou, DeepSeek sent shockwaves through the global AI industry last month with the launch of its latest AI model. Its AI Assistant app quickly became the most downloaded AI application worldwide, surpassing ChatGPT in late January. Within just 20 days, its daily active users exceeded 22 million, according to Chinese state media.

The company’s meteoric rise has propelled its founder, Liang Wenfeng, to national prominence. However, industry experts caution that despite DeepSeek’s rapid progress, China still faces challenges in AI hardware production due to ongoing U.S. export restrictions.

“DeepSeek’s ability to adapt its model to different chip architectures is impressive, but it doesn’t resolve the broader issue of China’s semiconductor supply constraints,” said Linghao Bao, senior analyst at Trivium China.

The production of advanced AI chips remains limited by the lack of high-end chipmaking equipment, which the U.S. has restricted from being exported to China.

International Scrutiny and Security Concerns

As DeepSeek continues its rapid expansion, global regulators are raising concerns over data security. Last week, Taiwan and Australia banned their government officials from using the AI service, citing data privacy risks.

South Korea has also issued warnings, while Italy imposed a complete ban on DeepSeek’s app last month due to unresolved privacy concerns. Other countries are now evaluating potential restrictions, reflecting growing scrutiny of China’s AI technology on the global stage.