The popular ChatGPT now has a rival from China called DeepSeek, a generative AI that uses advanced algorithms to generate human-like text based on input prompts, JUSTICE OKAMGBA writes.
Chinese artificial intelligence startup DeepSeek is making waves in the global tech industry with its innovative and cost-effective approach to AI model development.
Its latest model, R1, has drawn comparisons with industry giants like OpenAI’s ChatGPT, Google’s Gemini, and Meta’s Llama series, prompting debates about the massive budgets required to develop cutting-edge AI systems.
While DeepSeek has been accused of using techniques that rely on OpenAI’s technology, some industry experts argue that the criticism is unfounded and stems from a misunderstanding of how AI models are trained.
Nonetheless, the emergence of DeepSeek has had a significant impact—not just on the AI landscape but also on the financial markets, where it has caused a major sell-off in US tech stocks.
Here are 10 key facts that explain why DeepSeek is at the centre of attention.
Competitive
DeepSeek’s flagship AI model, R1, is proving to be a formidable competitor to models from OpenAI, Google, and Meta. It excels in areas such as coding, mathematics, and natural language understanding. However, what truly sets it apart is its affordability.
Unlike OpenAI’s GPT models, which require massive infrastructure investments, DeepSeek has managed to develop a high-performing AI system at a fraction of the cost. This efficiency has raised questions about whether US tech firms are overinvesting in AI development.
Less expensive
One of the most remarkable aspects of DeepSeek is its ability to train AI models at lower costs compared to other giants. According to a research paper released by DeepSeek, the company spent less than $6m on computing power to train R1.
To put this in perspective, US companies like Meta and Google invest billions of dollars annually in AI projects.
Recently, The PUNCH reported that Meta plans to spend up to $65bn this year on AI development, including building new data centres and expanding its talent pool. DeepSeek’s cost-effective approach has forced industry leaders to reconsider their strategies.
Former President of Google China, Kai-Fu Lee, highlighted DeepSeek’s cost efficiency as a game-changer.
“This is a clear indication that AI innovation does not necessarily require bottomless funding. DeepSeek has demonstrated that strategic resource allocation and smart engineering can rival even the most well-funded models,” he said.
Impact on US tech stocks
DeepSeek’s emergence has not only shaken the AI industry but has also sent shockwaves through financial markets.
The launch of R1 triggered a sell-off in US tech stocks, leading to a record one-day loss of $593bn in market value—the largest single-day loss for any company on Wall Street.
Nvidia, a leading supplier of advanced AI chips, was hit particularly hard. Investors are concerned that DeepSeek’s ability to create powerful AI models with cheaper hardware could reduce demand for high-end chips, posing a significant threat to companies like Nvidia, Google, Microsoft, and Meta.
DeepSeek app surge
DeepSeek’s AI app quickly became the most downloaded free app on Apple’s US App Store, surpassing OpenAI’s ChatGPT. This rapid rise in popularity signals a growing global interest in AI models that offer strong capabilities at a lower cost.
OpenAI’s response to DeepSeek’s rise
OpenAI CEO Sam Altman has acknowledged DeepSeek’s capabilities but remains confident in his company’s strategy.
“DeepSeek is certainly an impressive model, but we believe we will continue to push the frontier and deliver great products, Altman said.
He emphasised that OpenAI has no plans to take legal action against DeepSeek, stating, “No, we have no plans to sue DeepSeek right now. We are going to just continue to build great products and lead the world with model capability, and I think that will work out fine.”
DeepSeek’s founder and backing
DeepSeek was founded in 2023 by Liang Wenfeng, a graduate of information and electronic engineering from Hangzhou, China. Liang is also the leader of High-Flyer Capital Management, the hedge fund backing DeepSeek.
His vision of creating cost-efficient AI solutions has positioned China as a major player in the global AI race, challenging the dominance of US tech companies.
Meta’s ‘war rooms’ to analyse DeepSeek
Meta has taken DeepSeek’s rise seriously, reportedly setting up four internal “war rooms” to analyse the company’s technology and cost-saving methods.
These teams are tasked with understanding how DeepSeek managed to lower training costs, identifying its data sources, and assessing whether Meta can apply similar strategies to its own AI models.
Open-source
DeepSeek’s open-source approach has sparked debates in the AI community. Some see it as a positive move that promotes transparency, while others worry about potential risks.
Developer Eric Wang believes DeepSeek represents a much-needed challenge to tech giants.
“DeepSeek is open-source while ChatGPT is not. ChatGPT started out as an open-source platform but retracted after the rich tech predators got together and decided they wanted to monopolise the game. DeepSeek is a Godsend to punish these predatory capitalists. Their greed backfired spectacularly,” he said.
However, others are sceptical. Nathan Ketsdever warned that DeepSeek might pose privacy concerns, stating, “DeepSeek could very well track you and give your data to the Chinese government. DeepSeek is just a copycat of OpenAI. It’s absurd to make comparisons when one copied the other.”
Future of AI investment
DeepSeek’s emergence could have major implications for the $500bn AI investment initiative known as the Stargate project, a partnership between OpenAI, Oracle, and SoftBank.
Announced two weeks ago at the White House by US President Donald Trump, the Stargate project aims to create significantly greater computing power to accelerate AI development.
Analysts say DeepSeek’s success could jeopardise this initiative by proving that powerful AI can be built without the need for vast infrastructure investments.
Trump’s reaction
DeepSeek’s breakthrough has sparked political reactions as well. President Donald Trump weighed in on the matter, calling the company’s success a wake-up call for American industries.
“The release of DeepSeek, AI from a Chinese company, should be a wake-up call for our industries that we need to be laser-focused on competing to win,” Trump said in a video clip obtained on X (formerly Twitter).
