US President Donald Trump has said that Chinese startup DeepSeek’s technology should act as spur for American companies and said it was good that companies in China have come up with a cheaper, faster method of artificial intelligence.

“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,” Mr Trump said in Florida.

Investors sold technology stocks across the globe yesterday over concerns the emergence of a low-cost Chinese artificial intelligence model would threaten the dominance of the current US-based AI leaders.

“I’ve been reading about China and some of the companies in China, one in particular coming up with a faster method of AI and much less expensive method, and that’s good because you don’t have to spend as much money. I view that as a positive, as an asset,” Mr Trump said.

“I view that as a positive because you’ll be doing that too, so you won’t be spending as much, and you’ll get the same result, hopefully,” he said.

Mr Trump said Chinese leaders had told him the United States had the most brilliant scientists in the world, and he indicated that if Chinese industry could come up with cheaper AI technology, US companies would follow.

“We always have the ideas. We’re always first. So I would say that’s a positive that could be very much a positive development. So instead of spending billions and billions, you’ll spend less, and you’ll come up with, hopefully, the same solution,” Mr Trump said.

What is DeepSeek and why is it disrupting the AI sector?

Last week’s release of the latest DeepSeek model initially received limited attention, overshadowed by the inauguration of Mr Trump on the same day.

However, over the weekend, the Chinese artificial intelligence startup’s chatbot surged to become the most downloaded free app on Apple’s US App Store, displacing OpenAI’s ChatGPT.

DeepSeek has claimed that it developed its latest model, the R1, at a fraction of the cost that major companies are investing in AI development, primarily on expensive Nvidia chips and software.

The development is significant given the AI boom, ignited by ChatGPT’s release in late 2022, has propelled Nvidia to become one of the world’s most valuable companies.

The development also comes against a background of a US government push to ban Chinese-owned TikTok in the United States or force its sale.

David Sacks, Mr Trump’s AI adviser and prominent tech investor, said DeepSeek’s success justified the White House’s decision to reverse executive orders, issued under Joe Biden, that established safety standards for AI development.

The regulations “would have hamstrung American AI companies without any guarantee that China would follow suit,” Mr Sacks wrote on X.

Microsoft CEO Satya Nadella has said that less expensive AI was good for everyone.

However, last week at the World Economic Forum in Davos, Ms Nadella warned: “We should take the developments out of China very, very seriously.”

Microsoft plans to invest $80 billion in AI this year, while Meta announced at least $60 billion in investments on Friday.

Much of that investment goes into the coffers of Nvidia, whose shares plunged a staggering 17%.

The situation is particularly remarkable since DeepSeek, as a Chinese company, lacks easy access to Nvidia’s state-of-the-art chips after the US government placed export restrictions on them.

Elon Musk, who has invested heavily in Nvidia chips for his company xAI, suspects DeepSeek of secretly accessing banned H100 chips – an accusation also made by the CEO of ScaleAI, a prominent Silicon Valley startup backed by Amazon and Meta.

But such accusations “sound like a rich kids team got outplayed by a poor kids team,” wrote Hong Kong-based investor Jen Zhu Scott on X.

In a statement, Nvidia said DeepSeek’s technology was “fully export control compliant.”