February 7, 2024/Midnight
Erie, PA. – Last week, a China-based artificial intelligence startup called “DeepSeek” made a big wave in the technology industry. On Monday, January 27, DeepSeek overtook other AI apps to become the most downloaded platform on the App Store.
DeepSeek is a 1-year-old company that has its headquarters in Hangzhou, Zhejiang, China. It is owned and funded by a Chinese hedge fund High-Flyer. Founded in 2023, DeepSeek gains widespread popularity earlier this year with the release of its R1 program, directly competing with OpenAI’ o1.
So why the DeepSeek R1 model is special ? It is open-sourced, and people can easily access, use, modify and distribute its underlying code and model architecture, unlike other OpenAl’s models. By working this way, DeepSeek R1 allows itself to envolve, as developers around the world can acces and improve it.
R1 is called a reasoning model because it goes beyond answering basic text, and it can assist users with deep research, logical analysis, mathematics, and solving complex problems. It is able to break down problems, step-by-step logic, minimize errors, and provide logical answers.
What surprised many people is that DeepSeek R1 was created by using the old NVIDIA A100 chip, which was released in 2020, and cost only $6 million to train. In contrast, OpenAI’s, according to many reports, cost over $100 million to develop. Despite the current situation in which the U.S. is limiting major American tech companies from selling chips to China to no more than three times over three years, R1 has managed to create a comparative advantage for itself.
The introduction of DeepSeek R1 has caused significant turbulence in the stock market. According to CNN, Nvidia (NVDA), the leading supplier of AI chips, dropped almost 17% and lost $588.8 billion – the largest single-day loss in market value for any stock. In addition, many tech giants also witnessed a significant drop in their stock prices, including Meta, Alphabet (Google’s parent company), Marvell, Broadcom, and others.
What are tech CEOs saying about this? According to CNN, OpenAI Chief Product Officer Kevin Weil answered their question on a call with reporters about OpenAI’s new ChatGPT offering for government agencies. “It’s a super competitive industry, right? And this is showing that it’s competitive globally, not just within the US.”
In an interview with CNBC, co-founder of LinkedIn and an investor in AI Reid Hoffman said “The competition game is on. But I don’t think it’s the ‘Oh my God, we’re losing!’ as American technology.”
Alongside its major disruption in the tech industry, there are several reports claiming that DeepSeek’s user data is being leaked. This has led many politicians to condemn the platform and urge Americans not to use it. Some have called for a ban on the AI platform, and certain government offices have prohibited their employees from using it. Beyond the U.S., countries like Italy, Taiwan, and Australia have banned DeepSeek on all government devices, as reported by The Guardian.
