DeepSeek: Everything You Need to Know
DeepSeek, a Chinese artificial intelligence (AI) company, has recently received significant attention with its innovative chatbot, challenging established players in the AI industry.
This newsletter provides a comprehensive overview of DeepSeek, from its inception to its current impact, with a focus on its unique approach to model training.
The Genesis of DeepSeek
Founding and Background
Established in 2023 by entrepreneur Liang Wenfeng, DeepSeek emerged from a foundation in AI and finance.
Prior to founding DeepSeek, Wenfeng co-founded High-Flyer, a prominent Chinese hedge fund specializing in quantitative trading.
Mission and Vision
DeepSeek aims to make Artificial General Intelligence (AGI) a reality, focusing on foundational AI technologies rather than immediate commercial applications.
The company is committed to open-sourcing all its models, promoting transparency and collaboration within the AI community.
DeepSeek’s objective is to create an AI system that is both advanced and accessible to a broad audience.
DeepSeek's Technological Framework
The R1 Model
At the core of DeepSeek's offerings is the R1 model, an AI system designed to understand and generate human-like text.
Despite being developed with fewer specialized computer chips, the R1 model rivals OpenAI's models in performance.
Training Methodology
According to DeepSeek, the R1 model was trained using approximately 2,000 specialized computer chips, specifically NVIDIA's H800 GPUs.
This is significantly fewer than the up to 16,000 more advanced chips used by some competitors.
The training process was completed in about 55 days at a cost of approximately $5.58 million, which is roughly ten times less than what U.S. tech giant Meta spent building its latest AI technology.
This resource-efficient approach was partly driven by external constraints.
U.S. export restrictions limited China's access to the most advanced AI chips, compelling Chinese AI startups like DeepSeek to innovate with the resources available.
By optimizing their algorithms and training processes, DeepSeek was able to achieve high performance with less powerful hardware.
Key Features of DeepSeek's Chatbot
Core Functionalities
DeepSeek's chatbot offers several key features:
Answering Questions: It provides detailed responses to user inquiries.
Search Mode: This feature allows the chatbot to access real-time internet data to provide up-to-date information.
"DeepThink" Mode: In this mode, the chatbot offers step-by-step reasoning, enhancing its problem-solving capabilities.
Accessibility and User Experience
Users can access DeepSeek via smartphone apps, desktop websites, or third-party services.
Account creation is needed for full features.
Comparative Analysis: DeepSeek vs. ChatGPT
Performance Metrics
Benchmark tests indicate that DeepSeek's chatbot performs comparably to ChatGPT in tasks such as mathematics, coding, and natural language reasoning.
Resource Utilization
DeepSeek's approach to using fewer GPUs has significant implications for the AI industry, demonstrating that advanced AI models can be developed with less computational power.
Cost Implications
DeepSeek's free model offers a cost-effective alternative to subscription-based services like ChatGPT, making advanced AI accessible to a wider audience.
Market Impact and Industry Reactions
Financial Market Repercussions
The release of DeepSeek's chatbot led to significant market reactions, with major tech stocks experiencing notable declines.
For instance, Nvidia's stock fell by as much as 17–18% on 27 January 2025.
Industry Leaders' Perspectives
Leading figures in the American AI sector had mixed reactions to DeepSeek's success and performance.
Microsoft CEO Satya Nadella and OpenAI CEO Sam Altman both called DeepSeek "super impressive."
Other leaders in the field, including Elon Musk, expressed skepticism of the app's performance or of the sustainability of its success.
Challenges and Controversies
Censorship and Content Moderation
DeepSeek's chatbot has faced criticism for strict censorship on sensitive topics, aligning with Chinese government policies.
For example, it avoids discussions on events like the Tiananmen Square protests and issues related to Taiwan.
Data Privacy Concerns
There are concerns about data privacy, as DeepSeek stores user data on servers in China.
This has led to fears about potential data exploitation by the Chinese government.
Security Vulnerabilities
The sudden rise of DeepSeek has raised concerns and questions, especially about the origin and destination of the training data, as well as the security of the data.
The Future of DeepSeek and AI Development
Potential Developments
DeepSeek plans to continue enhancing its AI models, focusing on improving performance and expanding functionalities.
The company is also exploring opportunities for integration into various applications across different industries.
Broader Implications for the AI Industry
The emergence of DeepSeek has significant implications for the global AI competition, highlighting the potential for efficient and cost-effective AI development.
Its success may encourage other companies to explore open-source models and innovative training methodologies.
Conclusion
The appearance of DeepSeek, from seemingly nowhere, has burst a lot of bubbles in Silicon Valley.
The low cost of developing the model will have many investors asking questions about what their money is being used for at companies such as OpenAI.
Limitations notwithstanding, the open-source nature of the project makes the next stage of large language model development really interesting.
DeepSeek's rapid rise in the AI industry underscores the dynamic and evolving nature of artificial intelligence development.
By prioritizing efficiency, accessibility, and open-source collaboration, DeepSeek has positioned itself as a significant player in the global AI landscape.
As the company continues to innovate, it will be essential to monitor its developments and their broader implications for the future of AI.