What is DeepSeek? Why is Silicon Valley shaking at the sight of Chinese AI?

A Chinese startup, DeepSeek, has taken the world by storm, introducing a revolutionary low-cost, high-efficiency AI model. This innovation has propelled DeepSeek past ChatGPT to become the top app on the Apple App Store in the US. Here's a closer look at the groundbreaking technology behind DeepSeek and its impact on global tech.

What is DeepSeek?

DeepSeek is an AI model known as DeepSeek R1, developed by a Chinese startup founded in 2023 by Liang Wenfeng. Liang, an expert in artificial intelligence and quantitative finance, previously led a hedge fund utilizing AI for financial data analysis.

Today, DeepSeek’s team is composed of graduates from prestigious Chinese universities. The company has created open-source AI models, empowering developers worldwide to leverage its technology.

How Does DeepSeek Differ from OpenAI?

DeepSeek has garnered comparisons with OpenAI's ChatGPT and other leading AI models. Here’s what sets it apart:

Reasoning Capabilities: DeepSeek R1 provides reasoning behind its answers, enhancing its performance and reliability.

Cost Efficiency: While competitors spend billions on running AI models, DeepSeek has developed an equally powerful alternative at a fraction of the cost.

Performance Metrics: DeepSeek claims its model outshines rivals in areas such as math, general knowledge, and Q&A performance.

A Global Phenomenon with Challenges

DeepSeek’s popularity has surged, particularly in the US, where it recently topped the Apple App Store’s free app category, surpassing ChatGPT. However, the sudden spike in downloads led to a system crash, which the company quickly resolved.

Soon after, DeepSeek reported a cyberattack on its AI assistant, prompting it to temporarily limit new registrations.

Why is America Concerned?

The US has long restricted the export of high-end technologies like GPU semiconductors to China, aiming to maintain its lead in technological innovation. However, DeepSeek’s success demonstrates that these measures have had little effect.

Chinese engineers have achieved breakthroughs in creating low-cost AI models despite restrictions, leaving American companies like Meta and Microsoft grappling with questions about their own high-cost strategies.

Impact on Silicon Valley

DeepSeek’s rise has rattled Silicon Valley. The US Nasdaq index dropped by 3%, with Nvidia’s stock plummeting 17%, erasing nearly $600 billion in market value in a single trading session.

Nvidia, a leader in GPU manufacturing, has benefited immensely from the AI boom. However, DeepSeek’s ability to build AI models without extensive data, storage, or technology has disrupted expectations, causing a significant blow to Nvidia’s market dominance.

The Flaws of DeepSeek

While DeepSeek has gained global attention, its biggest drawback is its origin—China. Concerns over security and data privacy have always loomed large for Chinese apps.

Additionally, DeepSeek exhibits self-censorship on sensitive topics, avoiding discussions on issues like the 1989 Tiananmen Square protests, Taiwan, or Chinese President Xi Jinping. This raises questions about the transparency and independence of its AI models.

The Road Ahead

DeepSeek has not only showcased China’s technological prowess but also challenged the dominance of Silicon Valley. With its cost-effective approach, the startup is redefining the AI landscape. However, its future will depend on addressing security concerns and navigating geopolitical tensions.

As the world watches closely, one thing is certain—DeepSeek has set the stage for a new chapter in the global AI race.