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DeepSeek: A New AI Player
A new player has entered the quickly developing field of artificial intelligence (AI), upending the established IT industry and upending the power dynamics. The cost-effective invention of DeepSeek, a Chinese AI firm, is creating a lot of attention since it has the ability to compete with industry leaders like OpenAI and Anthropic. It was also the primary reason for Nvidia’s historic market cap collapse on January 27, when the top AI chip manufacturer lost 17% of its market share, or $589 billion, in market capitalization, the worst one-day loss in US stock market history.
Even still, DeepSeek’s ascent is not without controversy, prompting concerns about the morality and financial implications of its strategy. Let’s examine the nature of this Chinese AI business and the reasons behind the fervor around it.
DeepSeek: What is it?
Liang Wenfeng, an engineering graduate, created the Hangzhou-based business DeepSeek in 2023. Numerous Chinese companies attempted to develop their own AI-powered chatbots following the release of OpenAI’s ChatGPT, but ultimately fell short of customer expectations. On the other hand, DeepSeek is viewed differently. With the ‘DeepSeek – AI assistant’ app hitting the top ranks in the US Google Play store and Apple app store, the company recently gained widespread attention in the US IT industry for developing a sophisticated AI model.
With the recent release of its R1 and V3 models, DeepSeek has established itself as a strong contender in the AI race. In contrast to its western peers, such as OpenAI, who purportedly used over 16,000 chips, the business claims to have created its open source V3 LLM model with a budget of less than $6 million and just 2,000 Nvidia chips, according to a recent story by The Verge. GPT-4’s development cost more than $100 million, according to OpenAI CEO Sam Altman.
With the release of its R1 model, DeepSeek is 20–50 times less expensive to use than OpenAI’s o1 model, depending on the assignment, according to a post on the company’s official WeChat account.
A challenge to the dominance of the West
Both investors and Western tech companies are alarmed by DeepSeek’s quick development. Its capacity to produce outcomes with little funding calls into question the widely held belief that financial resources and processing power are the only factors that determine the success of AI development. Other IT firms are rushing to adapt as a result of the industry-wide reevaluation of investment policies.
The semiconductor maker Nvidia saw a more than 13 percent decline in share price. Additionally, according to a recent Business Insider report, Tokyo Electron fell 4.9%, AI investor SoftBank fell more than 8%, and Dutch chipmaker ASML also fell more than 10%.
On January 27, technology stocks saw a steep 4.5% decrease in the pan-European Stoxx 600. Notably, France’s digital automation company Schneider Electric witnessed a 9% decline, and Germany’s Siemens Energy, a supplier of AI infrastructure technology, fell by almost 20%. These losses were similar to those in Asian markets, where Nvidia’s supplier, Advantest, and Japanese chipmaker Disco saw drops of 1.8% and 8.6%, respectively. According to a recent story by The Guardian, S&P 500 futures down 1.4% and Nasdaq 100 futures fell 2.6% in the US.
The success of DeepSeek has geopolitical ramifications, even as the technology underlying its models is being praised. In addition to being a change in technology, it also poses a larger threat to Western supremacy in AI research and development. Tensions in the current tech competition between the US and China have been exacerbated by the possibility of China establishing a sizable presence in this field.
Due to “large-scale malicious attacks” on its software, DeepSeek recently stated on January 27 that it would temporarily limit new registrations.
The development of DeepSeek also comes as the US places limitations on China’s access to cutting-edge microprocessor technology that powers AI. Chinese AI developers have been sharing their knowledge and testing alternate methods in order to continue moving forward without a constant supply of imported chips. AI models that use a lot less processing power have been developed as a result of this partnership. Because of this, these devices are now much more affordable than they were before, which could completely upend the market.
In the AI sector, DeepSeek’s ascent represents a turning point. Its innovative strategy has already changed the conversation about AI research, demonstrating that well-funded tech giants are not the only ones capable of innovation. The world will be keenly observing the company’s growth to see how it handles the intricate nexus of geopolitics, ethics, and technology.
Outages plague DeepSeek as users swarm to the Chinese AI startup
On Monday, DeepSeek, a Chinese business, experienced website problems after its AI assistant rose to the top of the US App Store’s free app ratings.
According to its status page, the business fixed problems with its application programming interface and users’ inability to access the website. In keeping with its rapidly increasing popularity, Monday’s disruptions were the longest the company has experienced in about 90 days.
According to app data research firm Sensor Tower, the artificial intelligence application has seen a sharp increase in popularity among US users since its January 10 release, driven by the DeepSeek-V3 model, which its developers claim “tops the leaderboard among open-source models and rivals the most advanced closed-source models globally.”
The milestone demonstrates how DeepSeek has profoundly impacted Silicon Valley, challenging conventional wisdom regarding US dominance in AI and the efficacy of Washington’s export restrictions aimed at China’s cutting-edge chip and AI capabilities.
Advanced chips are needed to power the training of AI models, ranging from ChatGPT to DeepSeek. Since 2021, the Biden administration has expanded the breadth of prohibitions intended to prevent these chips from being transferred to China and used to train AI models for Chinese companies.
But according to a report published last month by DeepSeek researchers, the DeepSeek-V3 spent less than $6 million on training using Nvidia’s H800 CPUs.
The assertion that the chips utilized were not as powerful as the most cutting-edge Nvidia products Washington has aimed to keep out of China, along with the comparatively low cost of training, has led US tech executives to doubt the efficacy of tech export regulations, even though this detail has since been refuted.
Our goal is to demonstrate to the world that flying V can be just as safe as the Cuban wing airplanes we currently use, but it can also be far more energy efficient.
The business behind DeepSeek, a little startup based in Hangzhou that was established in 2023 when search engine behemoth Baidu unveiled the first Chinese AI large-language model, is not well known.
Although numerous Chinese IT companies, both big and small, have since developed their own AI models, DeepSeek is the first to receive praise from the US tech industry for matching or even outperforming state-of-the-art US models.
