Government policies, generous funding and a pipeline of AI graduates have helped Chinese firms create advanced LLMs.

The sudden rise of Chinese AI app DeepSeek has leaders in Washington and Silicon Valley grappling with how to keep the U.S. ahead in the crucial technology.

The start-up had become a key player in the “Chinese Large-Model Technology Avengers Team” that would counter US AI dominance, said another. China’s delight, however, spelled pain for several giant US technology companies as investors questioned whether DeepSeek’s breakthrough undermined the case for their colossal spending on AI infrastructure.