The Chinese startup DeepSeek has unveiled its new artificial intelligence model, DeepSeek-R1, which quickly became a leader in downloads within a week and caused a stir in global financial markets. The launch of this AI model led to a significant drop in the stock prices of American tech giants.
Who Created DeepSeek
The company was founded by 40-year-old engineer Liang Wenfeng. He began his career in finance, co-founding the hedge fund High-Flyer in 2015, which utilized artificial intelligence to predict market trends.
In 2021, Liang started acquiring Nvidia chips for a project aimed at developing AI models. At that time, his enthusiasm was considered an "unjustified experiment," but in December 2023, he established DeepSeek, focusing the company on advanced technology development.
How the AI Model Works
DeepSeek is an open language model of artificial intelligence capable of competing with solutions like ChatGPT from OpenAI.
The main advantage of the model is its low development cost. The company claims that it spent only $6 million on training, using 2,000 specialized chips, while competitors employ up to 16,000 chips and invest hundreds of millions of dollars.
Photo: DeepSeek / X
The model's performance in mathematics, programming, comprehension, complex tasks, multitasking, and software engineering
DeepSeek-R1 outperforms competitors in mathematical tests and programming, but OpenAI leads in overall knowledge levels.
The model employs a "selective activation" method, processing only relevant parts of the algorithm for each request. This reduces energy consumption and enhances performance. The developers achieved success by combining powerful Nvidia chips with simpler and cheaper components.
DeepSeek adopted an open development model to accelerate experience accumulation and attract talent. The company actively recruits specialists from top universities in China, offering them high salaries. Liang asserts that the younger generation in China is capable of more if given opportunities for realization.
"Our strength lies in team growth and creating an innovative culture. Openness and publication of research help us attract the best minds," said founder Liang Wenfeng.
Employees also have access to computational resources without needing prior approval, and discussions are encouraged in open workspaces.
Unlike many Chinese companies that borrow and adapt Western technologies, Liang set out to create an innovative product from scratch.
How Markets and Players Reacted
OpenAI CEO Sam Altman acknowledged DeepSeek's impressive results but expressed confidence that OpenAI will continue to set the tone for the development of artificial intelligence.
"The R1 model from DeepSeek is impressive, especially considering what they were able to achieve at such a price. We will certainly present models that are significantly better, and frankly, it’s great to have a new competitor," Altman commented on the social network X (formerly Twitter).
https://twitter.com/sama/status/1884066337103962416
The American chip supplier Nvidia stated that the new AI model is "a great achievement in the field of artificial intelligence."
Former U.S. President Donald Trump described the success of the Chinese company as "a wake-up call" for the American tech industry.
"We need to focus on competition to maintain leadership," he stated. However, Trump added that the reduction in technology costs could be a benefit for the entire industry.
American experts also question the data on the number of chips used, suggesting that DeepSeek might have secretly utilized more powerful resources despite sanctions. This view is shared by American billionaire Elon Musk.
https://twitter.com/elonmusk/status/1883761141647901083
However, Nvidia stated that the Chinese company did not violate U.S. requirements limiting access to advanced American chips in developing its technology. At the same time, many Nvidia products cannot be sold to Chinese companies without licenses from Washington.
Against the backdrop of DeepSeek's success, the Nasdaq 100 index fell by 3% during trading on January 27. This decline marked the largest drop in the past six weeks. The market capitalization of companies within the Nasdaq 100 fell by nearly $1 trillion compared to Friday, January 24. Nvidia suffered the most losses.
Earlier, Spot reported that Trump is launching a $500 billion AI infrastructure development project.