Analysis: China’s DeepSeek Proves Limited Resources Are No Barrier to Catching Up With U.S. AI Rivals

While chip shortage makes breakthroughs difficult, Chinese firms can narrow the gap with leading models at a fraction of the cost, industry insiders say

Chinese AI company DeepSeek has been the talk of the town since launching its open-source AI model DeepSeek-R1 on Jan. 20. Photo: VCG

As Chinese artificial intelligence (AI) startup DeepSeek shakes the global AI industry with its powerful and cost-effective model, domestic industry insiders attributed the firm’s breakthrough to its top-notch engineering and “fast follower” advantage.

Hangzhou-based DeepSeek launched its open-source AI model R1 on Jan. 20, with benchmark tests showing that it can go toe-to-toe with OpenAI’s o1 model launched in September and Meta Platform Inc.’s Llama 4, scheduled to be released this year.