The success of DeepSeek’s new AI model points to how China might eventually achieve an even bigger technological breakthrough in the face of US export curbs: Producing its own cutting-edge chips.

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.