A Chinese artificial intelligence startup, DeepSeek, has shaken the tech world by launching a chatbot that’s soared to the top of Apple’s App Store in the US, dethroning OpenAI’s ChatGPT as the most downloaded free app. This rapid success is thanks to DeepSeek’s revolutionary approach to AI development, which claims to require significantly fewer resources than its competitors. The impact has been immediate, with Nvidia’s share price dropping over 12% in pre-market trading.
A game-changing AI model
DeepSeek’s rise to prominence is tied to its R1 reasoning model, launched on January 20. This model, designed for solving complex problems, reportedly matches OpenAI’s GPT-4 performance on certain benchmarks. Its success builds on the company’s V3 large language model (LLM), released in December. DeepSeek claims the R1 model was developed for under US$6 million, a stark contrast to OpenAI’s GPT-4, which reportedly cost over US$100 million to train.
According to the New York Times, the company attributes this cost-efficiency to its innovative methods, which required only 2,000 specialised Nvidia chips to train V3, compared to the 16,000 or more chips needed for other leading models. These claims have sparked widespread interest and scepticism in equal measure, with developers and investors questioning the resource-intensive strategies of leading AI firms.
Ripple effects across the industry
DeepSeek’s success comes at a time when major AI players like Nvidia, Microsoft, OpenAI, and Meta are investing heavily in massive AI data centres. Nvidia alone is part of the US$500 billion Stargate Project, with US$100 billion reportedly allocated for its infrastructure.
However, DeepSeek’s efficient approach has prompted many to wonder if these massive investments are sustainable. With Nvidia’s share prices dipping and similar concerns rippling through companies like Microsoft, the industry’s reliance on compute-heavy models is being questioned.
DeepSeek’s rise also highlights the creativity and determination of its engineers, who appear to have overcome trade restrictions to curb China’s access to advanced chips. If their claims are accurate, this marks a significant challenge to the AI development strategies of Western tech giants.
What’s next for DeepSeek?
As the dust settles, DeepSeek’s success will likely influence the future direction of AI development. The company’s ability to rival industry leaders with fewer resources suggests a shift towards more cost-effective methods could be on the horizon. Whether or not DeepSeek can maintain its momentum, it has already shown that innovative approaches can disrupt even the most established players in the tech world.
