Donald Trump has said that DeepSeek, a Chinese startup, should serve as a "wake-up call" for America's AI industry, reports Sky News.

The US President aims for US tech companies to dominate the field but recognises the challenge posed by DeepSeek, which claims to have a technical edge over American competitors.

DeepSeek asserts that its AI models are comparable to those of US giants like OpenAI (the creator of ChatGPT) and Google’s Gemini, yet at a much lower cost. This has led to a dip in stock prices, particularly for chipmaker Nvidia, which experienced its largest one-day loss in history, it said.

However, Trump views DeepSeek’s success as potentially beneficial for US AI goals. Speaking in Florida, he remarked that the emergence of AI from a Chinese company should motivate American industries to focus on competing effectively. He highlighted DeepSeek’s ability to operate with fewer computing resources as an advantage, suggesting this could lead to cost savings without compromising performance.

On Monday, DeepSeek's app overtook ChatGPT in downloads on the Apple App Store. OpenAI’s CEO, Sam Altman, acknowledged the model’s competitiveness in a post on X, praising DeepSeek’s R1 “reasoning” model, which answers questions. However, Altman remained confident, asserting that OpenAI would continue to produce superior models, the report said.

DeepSeek, founded in Hangzhou, China in 2023 by Liang Wenfeng, who previously co-founded High-Flyer, a top Chinese hedge fund, built a cluster of 10,000 Nvidia chips to power its AI systems before the US imposed restrictions on chip sales to China. The company now uses Nvidia's lower-performing chips, which are not banned in China, indicating that cutting-edge technology might not be essential for AI development.

In January 2024, DeepSeek launched R1, an AI model claimed to be on par with similar offerings from US companies but at a reduced cost for specific tasks. Since its chatbot app launch, it has surpassed ChatGPT in downloads, added the report.

Concerns have emerged that DeepSeek could undermine a $500 billion AI investment by OpenAI, Oracle, and SoftBank in the Stargate project, announced by Trump last week, which aims to expand computing power for AI.

While DeepSeek's rise has attracted attention, it has not been without setbacks. The company recently reported experiencing large-scale cyberattacks, including one on Monday that disrupted user registration on its platform.