DeepSeek’s emergence as a low-cost Chinese AI chatbot has sent shockwaves through the technology, financial, and geopolitical spheres. This development is not surprising for those familiar with China’s disruption playbook, which has successfully disrupted industries such as mining and electric vehicles.

DeepSeek’s debut of its latest AI models has been hailed as a “Sputnik moment” by venture capitalist Marc Andreessen. The company’s open-source model is 20 to 50 times cheaper to use than OpenAI’s o1 model, depending on the task. This revelation has led to skepticism regarding DeepSeek’s claims about its models’ capabilities, total cost, and reliance on older chips.

DeepSeek is the latest example of a Chinese firm disrupting Western rivals with a lower-cost product. This strategy has been employed in various industries, including commodities such as nickel, lithium, graphite, cobalt, and copper. Chinese companies have flooded these markets with low-cost products, pushing down prices and forcing some Western rivals out of business.

China’s approach to the global electric vehicle market mirrors its AI strategy. The country has invested heavily in electric vehicle incentives and home-grown startups, resulting in the explosive growth of its EV industry. Chinese EV giants such as BYD have utilized their high levels of vertical integration and control over the global supply chain for EV batteries to sell their electric vehicles at significantly lower prices than anywhere else.

China has also employed similar strategies to wrestle market share from Western companies in other industries. Fast-fashion and e-commerce companies like Shein and Temu have disrupted the likes of Zara, H&M, Amazon, and eBay by competing largely on price. Xiaomi has increased its share of the global smartphone market from about 2% in 2013 to about 13% last year, Statista data shows.

DeepSeek’s disruption of the AI race has left America’s AI industry reeling and raised big questions about how the technology will advance from here. The US may have set itself up for disruption by seeking to constrain China’s access to the latest chips. DeepSeek’s success has shown that sanctions rarely work and often backfire, incentivizing Chinese companies to innovate and create more effective systems.

However, it may have been inevitable that AI would proliferate, with nations like China able to replicate and innovate on similar technologies in months. The global AI race is far from over, and the world should be prepared for more disruptions from Chinese tech companies in the future.