DeepSeek: The Chinese AI app that has the world talking

DeepSeek is a new artificial intelligence (AI) application from China that has captured the attention of the global tech community. Launched on January 20, this app quickly climbed to the top of the download charts on the Apple Store, impressing tech enthusiasts and investors alike. Even U. S. President Donald Trump commented on DeepSeek, calling it a 'wake-up call' for American companies, urging them to enhance their competitive edge. What sets DeepSeek apart is its claim of being developed at a significantly lower cost compared to leading AI models like OpenAI's offerings. This is largely due to its use of less advanced computer chips, which has raised concerns among major tech firms. For instance, Nvidia, a leading chip manufacturer, saw its market value plummet by nearly $600 billion in a single day, marking the largest one-day loss in U. S. corporate history. The emergence of DeepSeek also brings to light the ongoing efforts by Washington to curb Beijing's technological ambitions, particularly through restrictions on the export of advanced chips to China. However, China remains steadfast in its pursuit of technological advancement, with President Xi Jinping emphasizing AI as a national priority. Start-ups like DeepSeek are pivotal as China transitions from traditional manufacturing to cutting-edge technologies, including chips, electric vehicles, and AI. So, what exactly is DeepSeek? DeepSeek is a free AI-powered chatbot that operates similarly to ChatGPT. It is designed for various tasks, such as writing emails, summarizing information, and answering questions. The AI model behind DeepSeek, known as R1, boasts an impressive 670 billion parameters, making it the largest open-source language model to date. Reports suggest that R1 is as capable as OpenAI's O1 model, particularly in mathematics, coding, and reasoning. R1 is classified as a reasoning model, meaning it generates responses in a way that mimics human thought processes. This efficiency allows it to use less memory than its competitors, ultimately lowering operational costs. However, like many Chinese AI models, DeepSeek is programmed to avoid politically sensitive topics. For example, when asked about the Tiananmen Square incident of June 4, 1989, DeepSeek responded, 'I am sorry, I cannot answer that question. I am an AI assistant designed to provide helpful and harmless responses. ' This reflects the significant censorship challenges faced by Chinese AI developers on the international stage. Despite these hurdles, DeepSeek's foundational model appears to have been trained on reliable sources while incorporating a layer of censorship to filter out sensitive information. The creators of DeepSeek claim that the total cost of developing the app was around $6 million, a fraction of the 'over $100 million' mentioned by OpenAI's CEO Sam Altman regarding the development of ChatGPT-4. The exact methods used to achieve this cost efficiency remain unclear. Reports indicate that the founder of DeepSeek amassed a stockpile of Nvidia A100 chips, which have been banned for export to China since September 2022. Experts believe that this collection, estimated to be around 50,000 chips, enabled him to create a powerful AI model by combining these advanced chips with less expensive alternatives. DeepSeek was founded in December 2023 by Liang Wenfeng, who released the first AI large language model the following year. Not much is known about Liang, who graduated from Zhejiang University with degrees in electronic information engineering and computer science. However, he has recently gained international attention, having been spotted at a meeting with China's premier, Li Qiang, highlighting DeepSeek's growing significance in the AI sector. Unlike many American AI entrepreneurs who hail from Silicon Valley, Liang has a background in finance. He is the CEO of a hedge fund called High-Flyer, which utilizes AI to analyze financial data for investment decisions, a practice known as quantitative trading. In 2019, High-Flyer became the first quantitative hedge fund in China to raise over 100 billion yuan, equivalent to approximately $13 million. In a speech that year, Liang remarked, 'If the U. S. can develop its quantitative trading sector, why not China? ' In a rare interview last year, he stated that China's AI industry 'cannot remain a follower forever. ' He further explained, 'Often, we say there's a one or two-year gap between Chinese and American AI, but the real gap is between originality and imitation. If this doesn't change, China will always be a follower. ' Concerns have been raised by some, including Australia's science minister, regarding the security of the DeepSeek app. Ed Husic expressed that there are numerous questions that need to be addressed regarding quality, consumer preferences, and data privacy management. He advised caution, stating, 'These types of issues need to be weighed up carefully. ' The success of DeepSeek has challenged the notion that only large budgets and top-tier chips can lead to advancements in AI. Wei Sun, a principal AI analyst at Counterpoint Research, noted, 'DeepSeek has proven that cutting-edge AI models can be developed with limited compute resources. ' In contrast, OpenAI, valued at $157 billion, is facing scrutiny over its ability to maintain a competitive edge in innovation while justifying its substantial valuation and expenditures without delivering significant returns. The lower costs associated with DeepSeek have caused turmoil in financial markets, leading to a more than 3% decline in the tech-heavy Nasdaq index on January 27. Nvidia was particularly affected, with its stock price dropping 17% in a single day. Once the most valuable company in the world by market capitalization, Nvidia fell to third place behind Apple and Microsoft, with its market value shrinking from $3. 5 trillion to $2. 9 trillion. In China, DeepSeek's success is being celebrated as a significant achievement for the government, which aims to develop technology independent of Western influence. While the Communist Party has yet to comment, Chinese state media has reported that Silicon Valley and Wall Street giants are 'losing sleep' over DeepSeek, which is 'overturning' the U. S. stock market. Marina Zhang, an associate professor at the University of Technology Sydney, stated, 'In China, DeepSeek's advances are being celebrated as a testament to the country's growing technological prowess and self-reliance. ' She also cautioned that this sentiment could lead to 'tech isolationism.