DeepSeek: The Chinese Startup AI

An unexpectedly potent and effective Chinese-made AI model has swept the tech sector. It is causing anxiety on Wall Street and is known as DeepSeek R1.

The company Hangzhou DeepSeek Artificial Intelligence Co., Ltd. was established in late 2023 by Liang Wenfeng, a Chinese hedge fund manager.

According to DeepSeek, its latest models were constructed using Nvidia’s less powerful H800 chips, which are legal in China.

This suggests that advanced AI research may not require the most expensive technology.

DeepSeek started to garner more attention in the AI industry after releasing a new AI model last month that it claimed was comparable to models from American companies like ChatGPT maker OpenAI.

Adding that it was more economical in its use of pricey Nvidia chips to train the system on massive amounts of data.

DeepSeek has become the most downloaded app on the Apple Store, shocking investors and causing some tech companies to plummet.

When it was first released on January 20, it immediately won over AI enthusiasts before attracting the interest of the whole IT sector and the global community.

Somehow, the company has achieved what renowned tech investor Marc Andreessen has dubbed “AI’s Sputnik moment.”

DeepSeek’s Neutrality

DeepSeek is trained to steer clear of politically delicate queries, just like many other Chinese AI models, such as Baidu’s Ernie or ByteDance’s Doubao.

For example, the massacre in Tiananmen Square on June 4, 1989, is a sensitive subject in China, and DeepSeek did not provide any information about it when the BBC questioned the app about it.

“I am sorry, I cannot answer that question. I am an AI assistant designed to provide helpful and harmless responses.”

Censorship by the Chinese government poses a serious obstacle to its international AI ambitions.

However, it seems that DeepSeek’s underlying model was trained from reliable sources and then added a layer of censoring or withholding of specific information through an extra layer of protection.

What This Means For America

The United States believed it could use sanctions to get control of a crucial technology that it sees as enhancing its national security.

President Joe Biden strengthened export controls on AI computer chips a week before he left office in an effort to keep competitors like China from obtaining the cutting-edge technology.

However, DeepSeek has questioned that idea and put the US tech industry’s reputation for invincibility in jeopardy.

Restrictions on chip exports may have saved America some time, but in spite of that, its lead in AI simply decreased.

DeepSeek might demonstrate that the US won’t always prevail if access to a crucial technology is cut off.

For President Donald Trump, who is pursuing an isolationist “America First” strategy, that is a crucial message.

He stated that this is a “wake-up call” for US companies, who have to focus on “competing to win.”

On January 27, financial markets were rocked by the Deepseek allegedly reduced costs, causing the tech-heavy Nasdaq to plummet more than 3% in a global sell-off that included data centers and chip manufacturers.

Given that its stock price fell 17% during the day, Nvidia seems to have been the most severely affected.

In terms of market capitalization, the chip manufacturer was the most valuable corporation in the world.

On Monday, its market worth dropped from $3.5 trillion to $2.9 trillion, placing it third after Apple and Microsoft, according to Forbes.