But the story of DeepSeek also reveals just how much Chinese technological development continues to depend on the United States. DeepSeek used chips from the U.S. giant Nvidia to create its model, and, as it turns out, may have also tapped American data to train it. Washington can capitalize on that advantage to choke off Chinese tech firms.

The Hang Seng Tech Index, which tracks the 30 largest technology companies listed in the city, rose as much as 2.9% on Friday, reflecting a rise of more than 20% from its January low.

By bno - Taipei Bureau DeepSeek, the Chinese AI start-up, has generated significant attention since its launch of the R1 chatbot in January. Despite a claimed smaller budget than industry giants, the company asserts that its AI can rival those from the US at a fraction of the cost.