DeepSeek: What is it, and why does Donald Trump see it as a threat?

US President Donald Trump has warned against the low-cost

Chinese AI tool

DeepSeek, calling it a "wake up call" for America after it gave a huge shock to tech stocks at Wall Street on Monday.
"Hopefully, 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 to win," Trump told a Republican congressional retreat.
Trump, however, suggested that the shock to

Silicon Valley

could ultimately have a positive effect by encouraging more cost-effective innovation.
"I would say that could be a positive," he said. "So instead of spending billions and billions, you'll spend less, and you'll come up with hopefully the same solution."

What is DeepSeek?

DeepSeek is a Chinese tech startup founded by Liang Wenfeng that has developed several competitive

AI models

over the past year, gaining some industry attention.
Its V3 model, in particular, brought the company into the spotlight. However, according to The Wall Street Journal, the model's content restrictions on sensitive topics related to the Chinese government and its leadership have raised questions about its potential to compete effectively in the global market.
Further, the R1 model was officially launched last week and gained considerable attention this week after the company disclosed to The Wall Street Journal its remarkably low operating costs.

Why is it being seen as a threat by US?

The startup has demonstrated the potential to rival leading US AI companies, achieving comparable results with a fraction of the investment made by American firms.
The R1 model is reported to rival US-developed models, such as OpenAI's ChatGPT, while operating at a fraction of the cost.
The news rattled investors, raising concerns about potential disruptions to the lucrative AI supply chain that has fueled Silicon Valley's growth. The effects were swift and far-reaching, with the S&P 500 dropping 1.7%, led by steep losses in tech stocks. Companies heavily invested in AI infrastructure, such as Microsoft and Meta Platforms, experienced significant declines, while bond yields fell as investors shifted toward safer assets.