The company says they are on par with or better than industry-leading models in the U.S. at a fraction of the cost, which has led to steep declines for AI chipmaker NVIDIA's shares and others.

Here's what we know about the company and its product development.

Since the release of OpenAI's ChatGPT in late 2022, Chinese tech firms have been scrambling to create their own chatbots powered by artificial intelligence.

DeepSeek says two of its models have been showered with praise by Silicon Valley executives and U.S. tech company engineers and are on par with OpenAI and Meta's most advanced models.

It also says that one of them is 20 to 50 times cheaper to use than an OpenAI model depending on the task.

One technology CEO told CNBC he thinks DeepSeek is using NVIDIA chips which are banned from being sold to Chinese companies.

DeepSeek did not immediately respond to a request for comment on the allegation.

The company is a Hangzhou-based startup whose controlling shareholder is Liang Wenfeng, co-founder of quantitative hedge fund HiFlyer, based on Chinese corporate records.

It is unclear how much HiFlyer has invested in DeepSeek.

The two companies have offices in the same building, and HiFlyer owns patents related to chip clusters used to train AI models, according to Chinese corporate records.

DeepSeek's success has already been noticed in China's top political circles.

Last week, on the day DeepSeek released a new product to the public, company founder Liang attended a closed-door symposium hosted by Chinese Premier Li Qiang, according to state news agency Xinhua.

Liang's presence at the gathering is potentially a sign that DeepSeek's success could be important to Beijing's policy goal of overcoming Washington's export controls and achieving self-sufficiency in strategic industries like AI.