China's generative AI sector is experiencing rapid growth, fueled by the success of DeepSeek's new chatbot, R1. The market is projected to expand more than five-fold by 2030, reaching USD9.8 billion.
DeepSeek-R1 has become the most downloaded free app on Apple's App Store in China and the US, surpassing OpenAI's ChatGPT in popularity. Its high performance, achieved at a fraction of the cost, has sparked interest in Silicon Valley and beyond.
The rise of DeepSeek has boosted Chinese tech stocks, with the Hang Seng Tech Index gaining over 20% from its January low. Companies like Lenovo, Xiaomi, and Kingdee have seen significant gains, driven by hopes of integrating DeepSeek's AI model into their offerings.
Analysts believe DeepSeek's low-cost, powerful model could accelerate AI adoption across various sectors in China, particularly benefiting businesses involved in cloud application software and AI technologies. The integration of DeepSeek's model could also improve software companies' research and design efficiency, saving costs and driving earnings growth.
DeepSeek's ascent has also raised security concerns in several countries, with Australia, South Korea, and the US taking steps to restrict its use on government devices.