DeepSeek is a Chinese artificial intelligence company founded in 2023 by Liang Wenfeng in Hangzhou, Zhejiang. The company quickly gained prominence for its ambition to develop large language models (LLMs) capable of rivaling industry leaders like OpenAI and Anthropic. Unlike many competitors, DeepSeek embraced an open-source approach, believing that transparency and collaboration were crucial for AI development.

Early Development and Challenges

DeepSeek emerged at a time when the U.S. government had imposed strict export controls on advanced chips, such as Nvidia’s H100. To navigate these restrictions, DeepSeek optimized its AI models by employing engineering innovations such as custom chip communication methods, mix-of-models approaches, and techniques like Multi-head Latent Attention (MLA) and Mixture-of-Experts (MoE). These methods allowed DeepSeek to train its AI models with significantly fewer resources compared to competitors like Meta’s Llama 3.1 while maintaining high performance.

Breakthrough: DeepSeek-V3

By late 2024, DeepSeek introduced its flagship model, DeepSeek-V3, which had an impressive 671 billion parameters and was trained on 14.8 trillion tokens over 55 days at a cost of $5.58 million. The model reportedly outperformed Llama 3.1 and Qwen 2.5, while competing closely with GPT-4o and Claude 3.5 Sonnet. This achievement positioned DeepSeek as a serious contender in the AI industry

Technological Innovations of DeepSeek AI

Cost-Effective Model Training

DeepSeek has achieved remarkable cost efficiency in AI model training. While competitors like OpenAI and Meta invest tens of millions of dollars in training their models, DeepSeek reportedly trained its DeepSeek R1 model for just $6 million using 2,000 Nvidia H800 GPUs. This contrasts with Meta’s LLaMA 3, which required 16,000 H100 GPUs and a significantly higher budget​. By leveraging optimized engineering techniques, DeepSeek reduces both training and inference costs, making its AI models more accessible to a broader audience​.

Open-Source Development

One of DeepSeek’s defining features is its commitment to open-source AI. This strategy allows developers worldwide to access, modify, and improve its models, fostering innovation and collaboration​. The open-source nature of DeepSeek AI has several benefits:

Democratization of AI: Makes powerful AI tools available to researchers and businesses with limited computing resources.

Faster Development: Continuous improvements by a global developer community.

Transparency and Ethical AI: Enables auditing to reduce biases and enhance fairness​.

Adaptability to Geopolitical Challenges

DeepSeek has managed to innovate despite facing U.S. export restrictions on advanced semiconductor chips. The company’s ability to work within these constraints highlights its adaptability and resourcefulness, proving that AI development is not exclusively dependent on U.S.-made hardware​.

Challenges and Controversies

Being a Chinese AI company, DeepSeek has faced scrutiny regarding potential biases in its models. There are concerns about whether its AI systems may incorporate state-imposed censorship, especially in politically sensitive areas​. The AI industry is deeply intertwined with geopolitics. U.S. restrictions on exporting high-performance GPUs to China could impact DeepSeek’s ability to scale its models. However, the company’s innovative approach to overcoming chip shortages suggests resilience​.

Like all AI companies, DeepSeek must address concerns related to user data privacy, regulatory compliance, and ethical AI deployment. Open-source models, while transparent, also pose security risks if used maliciously.

How DeepSeek affected US stock market

DeepSeek has had a significant impact on the US market, particularly on the stock performance of AI-related companies. The launch of DeepSeek R1, a free, high-performance AI chatbot, led to a sharp selloff in AI stocks, with Nvidia alone losing $589 billion in market value on January 27, 2025. The Nasdaq index also fell by over 3%, with AI-linked stocks experiencing heavy declines. Investors reacted strongly to the fact that DeepSeek’s technology offers AI capabilities at a fraction of the cost of competitors like OpenAI, potentially disrupting the dominance of US-based AI firms​.

DeepSeek’s AI model is notable for being highly efficient, using less data and computing power compared to existing large-scale AI models. This has raised concerns about reduced demand for AI chips and large-scale data centers, which could negatively affect companies like Nvidia and cloud computing providers​. Additionally, DeepSeek’s rapid rise has intensified technological tensions between the US and China, with some analysts suggesting that export restrictions imposed on China may have inadvertently accelerated its independent AI development​. The situation remains fluid, with ongoing debates over the implications of DeepSeek’s emergence, both for the AI industry and for geopolitical relations between the US and China.

In conclusion, DeepSeek AI represents a significant shift in the AI industry, challenging traditional AI development models with its cost-efficient, open-source approach. Despite facing geopolitical and ethical challenges, DeepSeek has demonstrated remarkable resilience and innovation. As AI continues to evolve, DeepSeek’s influence is likely to grow, making it a key player in shaping the future of artificial intelligence. Whether it can sustain its momentum and compete with industry giants like OpenAI and Google remains to be seen, but one thing is clear—DeepSeek has already left a profound impact on the AI landscape.