There’s a new kid on the Artificial Intelligence-powered Chat Bot / Large Language Model block, and it’s threatening to blow the rest out of the water. Meet DeepSeek, developed by a Hangzhou-based research lab with a fraction of the budget used to train models created by ChatGPT, Gemini, Cloud AI, and the United States-based Computer Lab.
The creator of DeepSeek-R1 says its model was developed using less advanced, and fewer, computer chips than those employed by tech giants in the United States.
In a research paper released last week, the model’s development team said they had spent less than $6M on computing power to train the model—a fraction of the multibillion-dollar AI budgets spent by US tech giants such as OpenAI and Google, the creators of ChatGPT and Gemini, respectively. Emerk Andreessen, one of the most influential tech venture capitalists in Silicon Valley, hailed the model’s release as “AI’s Sputnik moment.”
The model is open-source, which has allowed engineers outside of China to audit its parent company’s claims. Venture capitalist Marc Andreessen, who is advising the Trump White House, called R-1 “AI’s Sputnik moment,” a breakthrough. The global AI community widely considered the U.S. the leader in AI, but R-1 has called that dominance into question.
DeepSeek’s training, done with thousands of Nvidia’s chips, could also reduce the effectiveness of America’s AI-focused trade with China. Sales of the company’s products are strictly regulated in China, but DeepSeek was able to secure about 50,000 graphics processing units there anyway, per VentureBeat. That’s a far cry from the roughly 500,000 that Openai has been reported to use, though. Another complicating factor: Trade sanctions tend to be in effect for a long time, so they may not catch on to DeepSeek’s work.
What is DeepSeek ?
DeepSeek, which is based in Hangzhou, was founded in late 2023 by Liang Wenfeng, a serial entrepreneur who also runs hedge fund High-Flyer. Though little-known outside of China, Liang has an extensive history of combining technologies and investing.
According to Chinese media Sina Finance, in 2013, he co-founded Hangzhou Jacobi Investment Management, an investment firm that employed AI to implement trading strategies with Liang Wenfeng, a co-alumnus of Zhejiang University.
Why has DeepSeek taken the tech world by storm?
Google boss Sundar Pichai went one step further, telling CNBC in Davos, “I think we should take the growth from China very seriously.” And US President Donald Trump made a “wake-up” call.
There are hundreds of billions of dollars that US companies have lost this week in tech stocks; chip-maker NVIDIA, for example, lost more than $600 billion and the tech-rich NASDAQ index ended Monday down more than three percent, with another drop likely based on expected earnings reports from AI giants Meta and Microsoft.
The R1 code is completely open to the public under the MIT license, which is a software license that allows users to use, modify, and distribute the software with certain restrictions. This means you can download it, change it, use it commercially without fees.
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