MARCH 2025
DeepSeek, Huawei, Export
Controls, and the Future
of the U.S.-China AI Race
By Gregory C. Allen
Introduction
Six months ago, few in the West aside from obsessive AI professionals had heard of DeepSeek, a Chinese
AI research lab founded barely more than a year and a half ago. Today, DeepSeek is a global sensation
attracting the attention of heads of state, global CEOs, top investors, and the general public.
With the release of its R1 model on January 20, 2025—the same day as President Trump’s second
inauguration—DeepSeek has cemented its reputation as the top frontier AI research lab in China and
caused a reassessment of assumptions about the landscape of global AI competition. By January 27,
DeepSeek’s iPhone app had overtaken OpenAI’s ChatGPT as the most-downloaded free app on Apple’s
U.S. App Store. The stock prices of some U.S. tech companies briey tumbled, including the AI chip
designer Nvidia, which lost more than $600 billion o its valuation in a single day. (AI chips are also
known as graphics processing units, or GPUs, and the terms are used interchangeably in this report.)
ChatGPT has again overtaken DeepSeek in app store rankings, and Nvidia’s stock price has since
mostly recovered. However, investor interest in Chinese tech companies has grown signicantly
and remains elevated. DeepSeek is now even reportedly seeking investment from U.S. venture
capital rms.
As a sector, AI is prone to overreactions and wild swings in perception. One might think that the story
of DeepSeek is just another overblown AI hype cycle. However, the extraordinary attention focused
on DeepSeek is justied, even if the conclusions some have drawn from its success are not. It would be
a great mistake for U.S. policymakers to ignore DeepSeek or to suggest that its accomplishments are
merely a combination of intellectual property theft and misleading Chinese propaganda. Policymakers
need to understand that—even while DeepSeek has in some cases simply implemented innovations
