Hangzhou-based DeepSeek's R1 chatbot stunned industry insiders and became a hero of China's AI sector last month with its ability to match the functions of its Western competitors at a fraction of the cost.
But concerns about the app's handling of users' personal data have pushed countries including South Korea, Italy, Australia and some US states to ban or restrict its use.
"In the past few years, China has faced all sorts of restrictions (especially) from the US," Sun Dasheng, an employee of AI server maker Puersai Computer, told AFP at Shanghai's Global AI Developers' Conference.
"But our country is currently sparing no effort to move forward," he said.
Sun's enthusiasm was echoed by other exhibitors at the industry fair, who proudly advertised that they were using DeepSeek's open-source software on their banners and posters despite the company's absence from the expo on Friday.
Humanoid robots were displayed across the venue including the model that danced for a TV audience of millions on state broadcaster CCTV's annual Lunar New Year programme last month.
"Now that the (R1) model is available, we believe the industries or products related to these large language models will develop even better," said Mark Feng, a product manager at chatbot maker Mobvoi.
Prior to DeepSeek's emergence, people believed China "could not make a large (AI) model on par with the United States", Lian Feng, an employee of Shanghai-based company Tiangang AI Trading Platform, told AFP.
China has shown it can produce the advanced software in addition to its existing control of large parts of the supply chain, giving it an edge over the United States, Lian said.
- 'Wake-up call' -
US President Donald Trump has called DeepSeek's release a "wake-up call" for American companies, highlighting how cheaply the R1 app was developed.
DeepSeek says it only spent $5.6 million on the project, a fraction of a $500-billion AI project sponsored by Trump.
Lian, the Tiangang AI Trading Platform employee, said he saw DeepSeek's current success as a groundbreaking event similar to the release of iPhone competitor Android's cheaper and ultimately more popular operating system in 2008.
The high price tag of Apple's iPhones, which had dominated the smartphone market up to that point, "obstructed the explosive growth of smartphones and of the mobile internet era", Lian said.
Lian said he believed DeepSeek would dramatically change the generative AI market much like how the introduction of Android phones permanently altered the smartphone industry.
"I believe there is still room for us to grow... I think in three or five years we will see an even better picture," Sun from Puersai Computer told AFP.
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