US president Donald Trump says success of DeepSeek’s low-cost AI model should be ‘wake-up call’ to US industry, after market shock

US president Donald Trump said the sudden popularity of Chinese AI assistant DeepSeek “should be a wake-up call” to US tech companies, whose shares slumped on Monday after the app raised questions around US companies’ heavy AI investments.

“The release of DeepSeek AI from a Chinese company should be a wake-up call for our industries that we need to be laser focused on competing,” Trump said in Florida.

He said he considered the low-cost model “very much a positive development” because “instead of spending billions and billions, you’ll spend less, and you’ll come up with, hopefully, the same solution”.

He said Chinese leaders had told him the US had the most brilliant scientists in the world and added that if Chinese industry could find a way to cut AI costs then US firms would also do so.

Export controls

“We always have the ideas,” he said.

DeepSeek’s app rose to top the list of free iPhone downloads in the US over the weekend, after the company released its latest model last week.

The company said it trained its open source model using relatively inexpensive infrastructure, in contrast to the billions spent on similar offerings by US companies.

Representative John Moolenaar, chair of the House Select Committee on China, took a harsher line, saying DeepSeek risked US national security and unfairly leveraged US technology.

“We must work to swiftly place stronger export controls on technologies critical to DeepSeek’s AI infrastructure,” he said.

Dominant AI chip maker Nvidia, whose shares closed down more than 16 percent on Monday, issued a statement saying that companies like DeepSeek would continue to require Nvidia processors to provide their offerings to users at scale, in a process known as inference.

Chip demand

“Inference requires significant numbers of Nvidia GPUs and high-performance networking,” the company stated.

One of DeepSeek’s research papers indicated it had used about 2,000 of Nvidia’s H800 chips in its training processes, a chip created to comply with US export controls to China in 2022.

DeepSeek’s use of lower-powered Nvidia chips has raised questions as to whether the demand for the company’s products can be sustained.