(Yicai) Feb. 7 -- China's generative AI sector is expected to experience rapid growth in the next few years, propelled by the success of artificial intelligence startup DeepSeek’s new chatbot, and the market is projected to expand more than five-fold by 2030, according to a recent report.

China’s sales of GenAI software reached USD1.8 billion last year, after two years of rapid development, according to an article published on UK market research firm Omdia’s WeChat account today. Given that the technology is still in its early stages, the market is expected to hit USD9.8 billion by 2029.

This revenue does not include expenses related to GenAI, such as chips and servers for training and inference, data center construction, and site acquisition costs, London-based Omdia added.

This year, GenAI companies will focus on developing AI agents, with the leading player in this field being DeepSeek, the report said. The Hangzhou-based firm uses reinforcement learning and distillation techniques to deploy GenAI models in resource-constrained operating environments, significantly improving development efficiency and returns on investment.

DeepSeek-R1 ousted OpenAI’s ChatGPT as the most downloaded free app on Apple's App Store in China and the US on Jan. 27, seven days after its launch. The chatbot has created a stir in Silicon Valley and beyond as its high performance rivals that of US closed-source competitors, and yet it was trained at a fraction of the cost.

However, as leading companies solidify their positions, the barriers to developing new models will rise significantly this year, the report said. Frequent market consolidation and player exits are expected, with some companies likely to transition into GenAI platform providers and application developers or focus on expanding overseas.

Editors: Dou Shicong, Kim Taylor