OpenAI said on Wednesday that Chinese AI startup DeepSeek's open-source models may have "inappropriately" based its work on the output of OpenAI's models, an OpenAI spokesperson told Axios. Why it matters: China's DeepSeek has taken the AI industry by storm with its R1 reasoning model that competes with OpenAI's o1,

DeepSeek built top-performing AI models using less-advanced chips at what it says is a fraction of the cost of rivals such as OpenAI.

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