Is the AI landscape about to be revolutionized? If you’re tracking the crypto world, you know disruptive tech when you see it. DeepSeek, a Chinese AI lab, has suddenly become a major player, much like a new cryptocurrency surging onto the scene. Their AI chatbot app has skyrocketed to the top of app store charts, sparking intense debate about the future of AI leadership and the demand for AI chips. Let’s dive into the story of DeepSeek and understand why this AI chatbot is creating such a buzz. What are the Origins of DeepSeek AI? DeepSeek’s story is rooted in the world of finance. It’s backed by High-Flyer Capital Management, a Chinese hedge fund that leverages AI models for smart trading decisions. Liang Wenfeng, an AI enthusiast and former student, co-founded High-Flyer in 2015. By 2019, High-Flyer was a full-fledged hedge fund, deeply invested in AI algorithms. In 2023, the DeepSeek lab was born, branching out from High-Flyer’s financial focus to explore broader AI model development. This lab then spun off into its own company, retaining the name DeepSeek. From the start, DeepSeek prioritized building its own data centers for training its powerful AI. However, like other Chinese tech companies, DeepSeek has faced headwinds from U.S. export restrictions on advanced hardware. To train its cutting-edge models, DeepSeek reportedly had to rely on Nvidia H800 chips, a less powerful alternative to the H100 chips favored by U.S. companies. Despite these challenges, DeepSeek has assembled a young and ambitious technical team, aggressively recruiting top AI researchers from leading Chinese universities. Interestingly, they also bring in talent from non-computer science backgrounds, aiming to broaden their AI’s understanding across diverse subjects, as reported by The New York Times. DeepSeek’s Breakthrough: How Strong are their AI Models? DeepSeek first made waves in November 2023 with the launch of its initial models: DeepSeek Coder, DeepSeek LLM, and DeepSeek Chat. But it was the release of the next-generation DeepSeek-V2 models in spring that truly grabbed the AI industry’s attention. DeepSeek-V2, a versatile system capable of analyzing both text and images, demonstrated impressive performance in AI benchmarks. Crucially, it was significantly more cost-effective to operate than comparable models available at the time. This price advantage forced competitors in China, including tech giants like ByteDance and Alibaba, to slash prices for their own models, and even make some entirely free. The subsequent launch of DeepSeek-V3 in December 2024 further solidified DeepSeek’s rising prominence. Internal testing by DeepSeek suggests that V3 surpasses both open-source models like Meta’s Llama and closed models like OpenAI’s GPT-4o in performance. Adding to their arsenal is DeepSeek’s R1 “reasoning” model, unveiled in January. DeepSeek claims R1 rivals OpenAI’s o1 model on key benchmarks. Reasoning models like R1 excel at self-correction and fact-checking, leading to greater reliability, particularly in fields like physics, science, and math. While reasoning models may take slightly longer to generate responses, the increased accuracy is a significant advantage. Here’s a quick comparison of DeepSeek’s key models: Model Key Features Strengths Considerations DeepSeek-V2 General-purpose text and image analysis High performance, cost-effective Preceded by V3 DeepSeek-V3 Advanced general-purpose model Outperforms Llama and GPT-4o (per DeepSeek testing) Subject to Chinese regulatory oversight DeepSeek R1 Reasoning model Fact-checks itself, reliable in technical domains Slightly slower response times What are the Downsides of China AI like DeepSeek? There’s a critical aspect to consider with DeepSeek and other China AI models. As they are developed in China, they are subject to content regulations by China’s internet regulator. This means their responses are monitored to ensure they align with “core socialist values.” In practical terms, within the DeepSeek AI chatbot app, certain topics are off-limits. For instance, R1 will not engage with questions about Tiananmen Square or Taiwan’s autonomy. This censorship is a crucial factor for users to be aware of, especially when compared to more openly accessible AI models developed in other regions. Is DeepSeek’s Business Model Sustainable? DeepSeek’s approach to the market is… unconventional. Its pricing strategy is highly disruptive, often undercutting competitors and even offering some products and services for free. DeepSeek attributes this aggressive pricing to breakthroughs in efficiency, allowing them to maintain extreme cost competitiveness. However, some industry experts question the company’s cost figures. Regardless of the exact mechanisms, developers are flocking to DeepSeek’s models. While not strictly open source in the traditional sense, DeepSeek provides permissive licenses that allow for commercial use. Clem Delangue, CEO of Hugging Face, notes that developers on their platform have created over 500 derivative models of R1, accumulating over 2.5 million downloads. What Impact is DeepSeek Having on the AI Industry? DeepSeek’s rapid ascent has been described as both “upending AI” and “over-hyped.” Its impact is undeniable. Notably, DeepSeek’s success was partially blamed for an 18% drop in Nvidia’s stock price on a recent Monday, and even prompted a public statement from OpenAI CEO Sam Altman. Microsoft has also integrated DeepSeek into its Azure AI Foundry service, showcasing its significance in the enterprise AI landscape. Mark Zuckerberg, when questioned about DeepSeek’s impact on Meta’s AI spending, emphasized that AI infrastructure remains a “strategic advantage” for Meta. Interestingly, while some embrace DeepSeek, others are wary. Certain companies, and even entire countries and governments, are reportedly banning DeepSeek. New York state has also prohibited its use on government devices, reflecting growing concerns about foreign influence in AI. What’s Next for DeepSeek AI? The future of DeepSeek remains uncertain, but further advancements in its AI models are almost guaranteed. However, the increasing scrutiny from the U.S. government regarding potential foreign influence could present challenges. DeepSeek’s journey is one to watch closely, as it navigates the complex landscape of global AI competition and regulation. Will DeepSeek continue its disruptive rise, or will geopolitical factors limit its reach? Only time will tell. Stay ahead of the curve in the rapidly evolving world of AI. Subscribe to Bitcoin World’s AI-focused newsletter to receive updates directly in your inbox every Wednesday. This story was originally published January 28, 2025, and will be updated continuously with more information. To learn more about the latest AI Model trends, explore our article on key developments shaping AI features.
