A Chinese-made artificial intelligence model called DeepSeek stunned markets this week when it announced it could produce AI models just as good as the likes of Open AI and its US rivals, but at a fraction of the cost.

Researchers at the company claim it cost $6m (£4.8m) to train the AI model, a fraction of the “over $100m” figure alluded to by OpenAI boss Sam Altman when discussing GPT-4.

On Monday, chip-making giant Nvidia’s market value plummeted by more than $600bn – the biggest one-day loss in US history.

Newly anointed US President Donald Trump said it was a “wake-up call” for US companies in the wake of Beijing’s push for supremacy in the new Cold War of AI. 

Speculation is rife as to how the Chinese company managed to achieve the feat. DeepSeek’s founder reportedly built up a store of Nvidia A100 chips, which have been banned from export to China since September 2022.

Some experts believe this collection – which estimates put at 50,000 – led him to build such the powerful AI model, by pairing these chips with cheaper, less sophisticated ones.

It raises questions about the ability of the US to contain China’s progress, even after introducing a restriction on the export of advanced chips to China. But It’s not just the US. Other countries are concerned too.

The Italian Data Protection Authority has halted DeepSeek AI over concerns about its handling of Italians’ private data. Ireland and Belgium have also requested information from the Chinese company regarding the model’s use of European data. The investigation continues.