DeepSeek, a Chinese-made AI app, is shaking up the tech industry with its low-cost, high-performance AI model. Learn about its impact on investors, tech giants, and global competition.
A new Chinese-made artificial intelligence (AI) app, DeepSeek, has quickly become one of the top downloads on the Apple App Store, making headlines across the globe. Released on January 20, 2025, the app has caught the attention of tech experts, investors, and even world leaders. DeepSeek’s rapid rise has shocked many, especially with its claim of being built at a fraction of the cost compared to industry giants like OpenAI. This has led to significant shifts in the tech market, including a massive drop in the stock value of companies like Nvidia, which lost nearly $600 billion in a single day.
What Makes DeepSeek Unique?
DeepSeek has generated a lot of buzz because it seems to challenge the idea that creating powerful AI models requires expensive chips and massive budgets. Unlike other leading AI models, which rely on expensive chips, DeepSeek reportedly costs much less to develop while delivering similar results. The company claims that it was able to train the model for just $6 million—compared to the more than $100 million that other companies, like OpenAI, typically spend on their models.
This cost-effectiveness has raised eyebrows in the AI community. Many are asking how DeepSeek was able to achieve such impressive results without using the latest, most advanced chips. Experts believe that DeepSeek’s founder, Liang Wenfeng, might have used a clever mix of older, cheaper chips along with a collection of Nvidia A100 chips, which have been banned from export to China since 2022. Despite the political restrictions, this combination of hardware has allowed DeepSeek to rival the performance of AI models like OpenAI's GPT-4, even while keeping expenses low.
How DeepSeek Works
Like other AI-powered tools such as ChatGPT, DeepSeek is a chatbot that uses large language models to carry out various tasks. These include answering questions, writing text, performing calculations, and even coding. DeepSeek’s design is similar to that of OpenAI’s GPT models, but it stands out in its ability to deliver results with less memory and fewer resources.
DeepSeek, like many Chinese-made AI models, has a built-in censorship feature, particularly when it comes to politically sensitive topics. For example, when asked about the Tiananmen Square massacre of 1989, DeepSeek did not provide any information and instead gave a vague response about being a “helpful assistant.” This aligns with China’s strict internet censorship laws and the country’s desire to control the flow of information.
The Founder: Liang Wenfeng and His Vision
DeepSeek was founded in late 2023 by Liang Wenfeng, a tech entrepreneur with a background in both finance and computer science. Liang, who studied at Zhejiang University, previously built a hedge fund called High-Flyer, which uses AI for quantitative trading. His expertise in finance and AI gave him a unique perspective on how to build an AI model that was not only cost-effective but also competitive with global players.
Liang has said that China should not just aim to follow the lead of other nations in AI development but should instead strive to be a leader in innovation. His views have struck a chord in both China and internationally, as many see DeepSeek’s success as proof that China can develop cutting-edge technology without relying on Western expertise.
Impact on the Global Tech Market
DeepSeek’s rise has had a major impact on the global tech landscape. Its success undermines the idea that AI advancements require massive spending on hardware like Nvidia’s high-end chips. This has made investors nervous, particularly those who have bet heavily on companies like Nvidia. The company's stock price saw a sharp decline after DeepSeek’s app became the most-downloaded free app on the Apple App Store, leading to a broader market sell-off.
Nvidia, once the most valuable company in the world by market capitalization, saw its stock drop 17% in one day. While the company has since started to recover, DeepSeek’s rise has led many to question whether the AI market is moving toward a new phase—one in which efficiency and creativity might matter more than just raw processing power.
DeepSeek and China’s Push for Tech Supremacy
DeepSeek’s success is also seen as a significant victory for China, which has been pushing hard to become a global leader in technology. While the Chinese government has not officially commented on DeepSeek’s rise, state media has celebrated the app’s success as a sign of China’s growing technological self-reliance. The app’s success is being touted as part of China’s broader push to build an independent tech industry free from reliance on Western technology.
This success comes at a time when the U.S. is working to contain China’s rise in high-tech fields, particularly in areas like AI and semiconductors. As part of its efforts, the U.S. has imposed export bans on certain advanced chips to China, but DeepSeek’s rise shows that Chinese companies can still thrive and innovate in the AI space, even with these restrictions.
Challenges and Concerns
Despite its success, DeepSeek is not without its challenges. The app has already faced "large-scale malicious attacks," leading the company to temporarily limit new registrations. There have also been concerns about privacy, data management, and security, with experts like Australia’s science minister, Ed Husic, calling for caution in adopting the app.
Moreover, DeepSeek’s reliance on older technology may pose long-term challenges. While the app has proven effective with fewer resources, it remains to be seen whether it can continue to scale and maintain its competitive edge as the AI landscape evolves.
DeepSeek’s rise has shaken the AI industry and the global tech market. By proving that powerful AI models can be built with fewer resources and less cost, the app has challenged the status quo and raised important questions about the future of AI development. Whether DeepSeek can maintain its success or whether it is just a momentary disruption remains to be seen, but one thing is clear: the world is now paying attention to China’s growing role in the AI industry.
As countries like China continue to push for technological self-sufficiency, apps like DeepSeek will likely play a pivotal role in shaping the future of AI innovation. It remains to be seen how this shift will impact global competition, chip makers, and the broader tech industry.
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