DeepSeek is rewriting the AI playbook on a budget
Matt V
January 28, 2025
DEEPSEEK
DeepSeek, a Chinese AI app, has overtaken ChatGPT to become the top free app on Apple’s App Store.
Its quick rise has caused share prices for major tech companies like Nvidia, Microsoft, and Meta to fall, raising questions about the future of AI investments.
Here’s what’s happening:
DeepSeek uses the DeepSeek-V3 model, reportedly developed for less than $6 million—much cheaper than the billions spent by rivals. However, this claim is disputed.
U.S. limits on advanced chip sales to China pushed developers to combine high-end and cheaper chips. This approach reduced costs and computing power needs, changing how AI models are built.
Investors were caught off guard, with AI-related companies like ASML and Siemens Energy seeing their share prices drop. Experts warn these low-cost models could challenge profits for firms investing in expensive AI systems.
So…who’s behind it?
Liang Wenfeng, an engineer from Hangzhou, founded DeepSeek in 2023.
By stockpiling banned Nvidia A100 chips and pairing them with cheaper alternatives, he created a competitive model.
Liang has become a key figure in China’s AI progress and was recently seen meeting with Premier Li Qiang.
DeepSeek highlights China’s growing AI capabilities despite U.S. restrictions.
While it could challenge U.S. companies, analysts note that American firms may maintain an edge due to better access to advanced chips.
Meanwhile, The Stargate Project, a $500 billion investment in Texas, aims to strengthen U.S. AI infrastructure.
DeepSeek just hit Silicon Valley where it hurts: the wallet.