The model was developed by the Chinese AI startup DeepSeek, which claims that R1 matches or even surpasses OpenAI’s ChatGPT o1 on multiple key benchmarks but operates at a fraction of the cost. DeepSeek’s success is even more remarkable given the constraints facing Chinese AI companies in the form of increasing US export controls on cutting-edge chips.

Tech stocks tumbled on Monday as advances by Chinese artificial intelligence start-up DeepSeek cast doubt on whether the US could sustain its leadership in AI by spending billions of dollars on chips.