Chinese artificial intelligence company DeepSeek announced on Monday that it had suffered a large-scale cyberattack, temporarily disrupting its services for new users. While registered users were able to log in without issues, the company revealed that the attack specifically targeted its user registration system.

DeepSeek described the incident as "large-scale malicious attacks" but did not elaborate on the source or motive behind the breach. The timing of the attack coincides with a surge in the company's global popularity, fueled by the recent success of its AI chatbot. 

Breakthrough AI Model and Market Impact

Last month, DeepSeek captured industry attention with the launch of a revolutionary AI model. The startup claims the model rivals those of major US companies, such as OpenAI, while being significantly more cost-effective due to its efficient use of Nvidia chips during training. Despite US trade restrictions limiting China's access to cutting-edge chips, DeepSeek used open-source technology and less-advanced hardware to develop its system, challenging the assumption that AI innovation requires top-tier infrastructure.

By Monday, DeepSeek's AI assistant had become the top free app on Apple's iPhone store, further solidifying its global rise. This achievement has sent ripples through the tech industry, sparking debates about competition between US and Chinese tech companies in the rapidly growing AI sector. Some US industry experts have raised concerns about DeepSeek's ability to achieve comparable results at a fraction of the cost, with investor Marc Andreessen describing the company's achievements as “one of the most amazing and impressive breakthroughs.”

Market Disruption

DeepSeek's rise has not only drawn attention to its technological advances but also triggered financial shockwaves. Shares of Nvidia, a key player in the AI hardware industry, dropped by 10% in premarket trading, and Nasdaq 100 futures fell by 3.4%. European tech companies also felt the impact, with ASML Holding NV experiencing an 11% decline. Analysts suggest that DeepSeek's cost-effective approach could fundamentally challenge the business model of high-capital AI infrastructure favored by Silicon Valley.

Founded in Hangzhou, China, in 2023, DeepSeek has rapidly established itself as a major player in the AI industry. Its innovative model and growing global influence highlight intensifying competition between China and the US in the race for AI dominance, forcing industry leaders to rethink their strategies.

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