"Chinese AI Model Tops US App Store, Shakes Global Markets"

Chinese AI Model DeepSeek Surpasses ChatGPT as No. 1 App on US App Store

In a significant development, the Chinese AI model DeepSeek has surpassed OpenAI's ChatGPT to become the number one app on the US App Store. This achievement highlights the growing prowess of Chinese AI technology and challenges the assumption that Chinese AI development lags behind its US counterparts.

DeepSeek, founded by quant fund chief Liang Wenfeng, released its DeepSeek-R1 model last week, which has demonstrated capabilities matching those of industry leaders OpenAI and Meta in mathematics and coding tasks. The model's success lies in its innovative approach to AI architecture, using a Mixture-of-Experts (MoE) system that activates only 37 billion parameters per inference step out of a total 671 billion available parameters. This efficiency drastically reduces both costs and computing requirements compared to traditional AI models.

The market reaction to the announcement was swift and dramatic. Nasdaq 100 futures dropped 3.2%, while S&P 500 futures fell 1.9%. Nvidia, a primary beneficiary of the AI boom due to its dominant position in AI chip manufacturing, saw its shares decline by over 6% on Germany's Tradegate. The ripple effects extended to European markets, where tech stocks led market losses. Chip equipment manufacturer ASML Holding NV experienced a decline of more than 8%, highlighting investors' concerns about the broader implications for the AI supply chain.

The development has particularly strong implications for US-China technology competition. Despite Washington's trade restrictions limiting access to cutting-edge chips, DeepSeek successfully built its model using open-source technology that remains widely accessible. Chinese AI-related stocks responded positively to the news, with Merit Interactive Co., which has incorporated DeepSeek's model into its marketing, seeing its stock rise to daily trading limits. The Hang Seng Tech Index in Hong Kong climbed as much as 2% ahead of Lunar New Year holidays.

The timing of DeepSeek's announcement coincides with a crucial earnings week for major tech companies, including Apple and Microsoft. The sector's high valuations, with the Nasdaq 100 trading at 27 times estimated forward earnings, face renewed scrutiny in light of this development. However, the model is not without controversy. Users have identified a censorship layer that restricts responses to certain politically sensitive topics, raising questions about the balance between