TMTPOST – U.S. President Donald Trump warned Monday that the rise of the Chinese AI app DeepSeek “should be a wake-up call” for U.S. tech companies as the app is shaking the AI sector. 

Trump said he still expected U.S. tech companies to lead the AI race, but he admitted the challenge posed by DeepSeek, a low-cost AI assistant that rose to No. 1 on the Apple app store over the weekend. 

“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,” he said in Florida. 

DeepSeek has shocked  U.S. tech companies because it has performed well in tests compared with competing AI models from Meta and OpenAI, while it was developed at a much lower cost, according to the little-known Chinese startup behind it. 

Trump said he considered the low-cost model to be “very much a positive development” for AI overall, because “instead of spending billions and billions, you’ll spend less, and you’ll come up with, hopefully, the same solution.” 

DeepSeek is the latest in an array of Chinese apps to gain popularity in the United States in recent weeks. Americans flocked to the Chinese apps RedNote and Lemon8 as alternatives to TikTok when TikTok approached the January 19 divest-or-sell deadline due to its own links to China.

Last week, Trump signed an executive order scrapping some Biden administration rules about AI development that Trump said had prevented the industry from advancing fast. 

It wasn’t immediately clear, though, what new AI policies, if any, the Trump administration or Congress might pursue in response to DeepSeek’s rise.

DeepSeek’s developers say they created the app despite U.S. export controls on advanced semiconductors, leading to a vigorous online debate Monday about how effective those controls have been and what their future should be.

Nvidia Corporation shares closed around 16.9% lower on Monday for their worst day since March 16, 2020. The day also saw Nvidia wiped out nearly $600 billion in market value as shares plunged, shattering the biggest daily drop record in market capitalization for the U.S. listed companies set by the artificial intelligence (AI) chip giant in last September. U.S. AI-related stocks suffered a bloodbath on a shock from Chinese AI startup DeepSeek.