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What is DeepSeek?
DeepSeek, a startup located in Hangzhou, is primarily owned by Liang Wenfeng, who is also a co-founder of the quantitative hedge fund High-Flyer, as indicated by Chinese corporate records. In March 2023, Liang’s fund announced via its official WeChat account the introduction of DeepSeek’s latest AI models, which the company claims rival or exceed the performance of leading models in the United States while being significantly more cost-effective. This development poses a potential disruption to the established technology landscape.
The rise of DeepSeek
The company has garnered significant attention within global AI communities, particularly after revealing in a recent paper that the training of its DeepSeek-V3 model required less than $6 million in computing resources utilizing Nvidia H800 chips. Furthermore, DeepSeek’s AI Assistant, which operates on the DeepSeek-V3 model, has surpassed ChatGPT to become the highest-rated free application on the Apple App Store in the United States. This achievement has led to skepticism regarding the rationale behind substantial AI investments pledged by certain U.S. tech companies, resulting in a decline in the stock prices of several major tech firms, including Nvidia.
The launch of OpenAI’s ChatGPT in late 2022 prompted a rush among Chinese technology companies to develop their own AI-driven chatbots. However, following the introduction of Baidu’s first Chinese equivalent to ChatGPT, there was considerable disappointment regarding the disparity in AI capabilities between U.S. and Chinese enterprises. DeepSeek’s models have effectively reversed this narrative, with both DeepSeek-V3 and DeepSeek-R1 receiving acclaim from executives in Silicon Valley and engineers from U.S. tech companies, as they reportedly match the sophistication of OpenAI and Meta’s most advanced offerings.
Moreover, these models are more economical to operate. According to a post on DeepSeek’s official WeChat account, the recently launched DeepSeek-R1 is estimated to be 20 to 50 times less expensive to use than OpenAI’s model, depending on the specific task.
DeepSeek’s objective
The mission of DeepSeek to engage in research is reminiscent of that of companies such as OpenAI, the Silicon Valley entity that left a significant mark on the field of artificial intelligence in the autumn of 2022. However, the parallels largely cease at that point.
DeepSeek Headquarters as imagined by AI.
DeepSeek’s foundation lies in the financial sector rather than in a pure technological pursuit. Its parent organization, High-Flyer, a Chinese hedge fund, did not originate as a research facility aimed at protecting humanity from the potential risks of A.I., as OpenAI does. Instead, it was established as a business leveraging A.I. to make strategic investments in the Chinese stock market.
High-Flyer prospered by taking advantage of a market largely influenced by retail investors in China, who are characterized by their impulsive trading behaviors. In 2021, however, High-Flyer faced challenges due to regulatory actions in China aimed at curbing speculative trading, which the government believed conflicted with their efforts to stabilize the markets.
In response, High-Flyer sought a new avenue that it claimed was more in line with the priorities of the Chinese government: advanced artificial intelligence.
“We aspire to create initiatives of greater significance that extend beyond the investment sector, but this has been misconstrued as speculation in A.I. stocks,” stated Lu Zhengzhe, the chief executive of High-Flyer, in an interview with Chinese state media in 2023. “We have established a new team that operates independently from our investment activities, effectively functioning as a second start-up.”
Thus, DeepSeek was established. Like many other Chinese start-ups, DeepSeek entered an existing market with a distinct business strategy.
