Deepseek, a little-known Chinese start-up, has sent shockwaves through the global tech sector with the release of an artificial intelligence (AI) model to rival Google and OpenAI.
DeepSeek-R1’s creator says its model was developed using less advanced and fewer, computer chips than employed by tech giants in the United States (US).
In a research paper released last week, the model’s development team said they had spent less than US$6 million (about N$112 million) on computing power to train the model – a fraction of the multibillion-dollar AI budgets enjoyed by US tech giants such as OpenAI and Google, the creators of ChatGPT and Gemini, respectively.
Marc Andreessen, one of the most influential tech venture capitalists in Silicon Valley, hailed the release of the model as “AI’s Sputnik moment”.
The sudden emergence of a small Chinese start-up capable of rivalling Silicon Valley’s top players has challenged assumptions about US dominance in AI and raised fears that the sky-high market valuations of companies such as Nvidia and Meta may be detached from reality.
On Monday, Nvidia, which holds a near-monopoly on producing the semiconductors that power generative AI, lost nearly US$600 billion (about N$11 trillion) in market capitalisation after its shares plummeted by 17%.
US president Donald Trump, who last week announced the launch of a US$500-billion (about N$9 trillion) AI initiative led by OpenAI, Texas-based Oracle and Japan’s SoftBank, says DeepSeek should serve as a “wake-up call” on the need for US industry to be “laser-focused on competing to win”.
What is DeepSeek?
DeepSeek, which is based in Hangzhou, was founded in late 2023 by Liang Wenfeng, a serial entrepreneur who also runs the hedge fund High-Flyer.
Though little known outside China, Liang has an extensive history of combining burgeoning technologies and investing.
In 2013, he co-founded Hangzhou Jacobi Investment Management, an investment firm that employed AI to implement trading strategies, according to Chinese media outlet Sina Finance.
Liang went on to establish two more firms focused on computer-directed investment in 2015 and 2016, respectively.
In an interview in 2023, Liang dismissed the suggestion that it was too late for start-ups to get involved in AI or that it should be considered prohibitively costly.
“Reproduction alone is relatively cheap – based on public papers and open-source code, minimal times of training, or even fine-tuning, suffices. Research, however, involves extensive experiments, comparisons and higher computational and talent demands.”
Liang said his interest in AI was driven primarily by “curiosity”.
“From a broader perspective, we want to validate certain hypotheses.
For example, we hypothesise that the essence of human intelligence might be language and human thought could essentially be a linguistic process,” he said.
“What you think of as ‘thinking’ might actually be your brain weaving language.
This suggests that human-like AGI could potentially emerge from large language models,” he added, referring to artificial general intelligence (AGI), a type of AI that attempts to imitate the cognitive abilities of the human mind.
DeepSeek did not immediately respond to a request for comment.
On Monday, Wall Street Journal journalist Gregory Zuckerman said he had learned that Liang wrote the preface for the Chinese edition of a book he authored about the late American hedge fund manager Jim Simons.
“Simons left a deep impact, apparently,” Zuckerman wrote in a column, describing how Liang praised his book as a tome that “unravels many previously unresolved mysteries and brings us a wealth of experiences to learn from”.
“Even my mother didn’t get that much out of the book,” Zuckerman wrote.
Why has DeepSeek taken the tech world by storm?
Put simply, the company’s success has raised existential questions about the approach to AI being taken by both Silicon Valley and the US government.
US tech firms have been widely assumed to have a critical edge in AI, notably because of their enormous size, which allows them to draw top talent from around the world and invest massive sums in building data centres and purchasing large quantities of costly high-end chips.
DeepSeek’s arrival on the scene has challenged the assumption that it takes billions of dollars to be at the forefront of AI.
“OpenAI was founded 10 years ago, has 4 500 employees, and has raised US$6.6 billion (about N$123 billion) in capital.
DeepSeek was founded less than two years ago, has 200 employees, and was developed for less than US$10 million (about N$186 million),” Adam Kobeissi, the founder of market analysis newsletter The Kobeissi Letter, said on Monday.
“How are these two companies now competitors?” – Al Jazeera
Read more at https://www.aljazeera.com/economy/2025/1/28/why-chinas-ai-startup-deepseek-is-sending-shockwaves-through-global-tech
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