DeepSeek, a Chinese AI company, has made significant strides, creating waves in both global stock markets and the artificial intelligence (AI) sector.
Its impact is now rapidly expanding within China, with some of the country’s biggest tech giants rushing to integrate its open-source AI model into their own services, even though many of these companies had previously been developing their own chatbots.
Huawei’s Integration of DeepSeek
In early February, telecom giant Huawei announced that it would run DeepSeek on its in-house computing hardware, which includes its domestically produced Ascend computer processors.
This marks a significant moment in the AI space as it proves that high-performing models, like DeepSeek’s, no longer require Nvidia’s chips—which are considered some of the most powerful in the world—to operate.
Breaking Free from US Sanctions
The collaboration between DeepSeek and Huawei has been hailed as a breakthrough, as it highlights how China can now deliver AI performance on a global scale without relying on US-made chips.
According to analysts at Bernstein, this partnership defies US sanctions and proves that China can develop a competitive AI hardware and software stack using locally produced resources instead of Nvidia’s chips.
In late 2022, the Biden Administration implemented several rounds of export controls on China, aiming to prevent access to technology that could potentially be used to develop weapons and next-generation AI systems.
However, DeepSeek’s success with its R1 AI model challenges this strategy. The R1 AI is reportedly trained at a fraction of the cost of established players like ChatGPT, challenging the assumption that limiting access to advanced chips would hinder China’s progress.
Support from Chinese AI Chipmakers
As DeepSeek gains recognition, several leading Chinese AI chipmakers have thrown their support behind the company.
Moore Threads, Tencent-backed Enflame, Baidu’s Kunlunxin, and Hygon Information Technology have all announced that they will run DeepSeek’s AI model on their respective computing chips.
Expansion Across Cloud Platforms
Beyond the chipmaking sector, China’s major tech firms have also moved to incorporate DeepSeek’s technology into their cloud offerings. Alibaba, Tencent, Baidu, and Bytedance (the parent company of TikTok) have integrated the service into their platforms.
Additionally, Lenovo, Geely, and the country’s three major telecom operators have also adopted DeepSeek for their cloud services and products.
The Appeal of Open-Source Models
According to Lian Jye Su, Chief Analyst at Omdia, the adoption of DeepSeek by these Chinese tech giants reflects the growing recognition of open-source models in the AI landscape. He stated, “If your model is good enough, AI giants will integrate it into their platforms.”
Despite competing AI products, these companies are turning to DeepSeek, primarily because it helps attract more users and businesses to their platforms.
Although monetizing large models like DeepSeek directly is challenging for these tech firms, integrating it into their platforms provides value in terms of consumer and enterprise applications, which ultimately drives growth.
A Global Phenomenon
DeepSeek, which was founded in 2023 in Hangzhou, stunned the world last month with the launch of its latest AI model. The AI Assistant app quickly became the most downloaded app globally, surpassing ChatGPT in late January.
Within just 20 days of its launch, DeepSeek reported that it had amassed over 22 million daily active users, according to state media.
This rapid success has catapulted Liang Wenfeng, DeepSeek’s founder, into the limelight, earning him recognition as a national hero.
However, analysts caution that there are still significant challenges ahead, especially when it comes to the AI chip development in China.
Challenges Ahead for China’s AI Sector
Despite DeepSeek’s remarkable success, China’s AI chip development continues to face bottlenecks due to the US export restrictions on high-tech equipment.
According to Linghao Bao, Senior Analyst at Trivium China, while the ability to port DeepSeek models to different chip architectures quickly is impressive, it does not resolve the ongoing chip shortage problem.
The absence of advanced chipmaking equipment—which the US has banned from being exported to China—remains a significant challenge.
Growing Scrutiny and Global Bans
The rise of DeepSeek has not gone unnoticed outside of China. Several governments have expressed concerns over the data security risks associated with the platform. Last week, both Taiwan and Australia banned their government officials from using DeepSeek.
Additionally, some ministries in South Korea and government departments have also issued bans. Most notably, Italy imposed a nationwide ban on DeepSeek’s app due to unresolved privacy concerns.
As more countries begin to scrutinize the company’s data practices, DeepSeek’s global expansion is facing regulatory hurdles.
DeepSeek has emerged as a transformative force in the global AI landscape, significantly altering the dynamics within China’s tech industry and challenging Western AI dominance.
By successfully launching a high-performance model without reliance on US-made chips, DeepSeek has proven that China can develop competitive AI technology using locally sourced resources.
However, while the company’s rapid success is undeniable, its future may still be shaped by ongoing chip production limitations and increasing international scrutiny over data security concerns.
FAQs
What is DeepSeek’s impact on China’s tech industry?
DeepSeek’s rise has significantly influenced China’s AI industry, with major tech companies integrating its open-source model into their platforms, signaling a shift away from reliance on US-made AI chips.
How has DeepSeek managed to succeed despite US sanctions?
DeepSeek’s success, including its ability to operate without Nvidia chips, demonstrates China’s growing capacity to deliver AI performance using domestically developed hardware, breaking the assumption that US export restrictions would halt progress.
Which Chinese companies are supporting DeepSeek?
Leading Chinese AI chipmakers, such as Moore Threads, Tencent-backed Enflame, and Baidu’s Kunlunxin, have pledged support for DeepSeek, running the model on their chips.