DeepSeek, a Chinese tech startup, has rapidly emerged as a formidable player in the artificial intelligence arena since its founding in 2023. Based in Hangzhou, China, the company launched its first AI large language model in the same year. The model, known as R1, demonstrated advanced reasoning capabilities, such as rethinking approaches to math problems, and quickly gained popularity. This week, the company's AI assistant became the most downloaded free app on Apple's iPhone store.
The availability of DeepSeek's chatbot on both Apple and Google app stores has significantly broadened its reach since the beginning of the year. Comparatively, R1 offers a more cost-effective solution than OpenAI's similar model, o1. This affordability is achieved through efficient use of expensive Nvidia chips, making it competitive with other U.S.-based models like OpenAI's ChatGPT.
DeepSeek's recent announcement has drawn parallels with Huawei's strategic product releases amid diplomatic tensions over U.S. export controls. Gregory Allen, director of the Wadhwani AI Center, noted that while DeepSeek's technological advancements are genuine, the timing of its release aligns with political motives. This development places pressure on U.S. foreign policy strategies aimed at restricting the sale of American-designed AI semiconductors to China.
The economic impact of DeepSeek remains uncertain. Bernstein analyst Stacy Rasgon remarked on the company's financial opacity:
"What their economics look like, I have no idea," – Rasgon
Rasgon also highlighted concerns about pricing:
"But I think the price points freaked people out." – Rasgon
He further commented on the capabilities of DeepSeek's models:
"The models they built are fantastic, but they aren’t miracles either," – Rasgon
In the broader context, venture capitalist Marc Andreessen described DeepSeek's AI model release as a "Sputnik moment," evoking the historic 1957 satellite launch that intensified the Cold War space race. This comparison underscores the potential geopolitical implications of China's technological strides in AI.
Amidst these developments, U.S. regulatory frameworks face scrutiny. Andreessen critiqued the American government's stringent AI industry regulations, suggesting they could disadvantage domestic companies while allowing Chinese counterparts to gain ground. This perspective gains further relevance following President Donald Trump's executive order last week. The order mandates identifying and closing loopholes in existing export controls, signaling a continuation of efforts to curb AI semiconductor sales to China.
