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Yahoo
28-01-2025
- Business
- Yahoo
DeepSeek: How China's 'AI heroes' overcame US curbs to stun Silicon Valley
When ChatGPT stormed the world of artificial intelligence (AI), an inevitable question followed: did it spell trouble for China, America's biggest tech rival? Two years on, a new AI model from China has flipped that question: can the US stop Chinese innovation? For a while, Beijing seemed to fumble with its answer to ChatGPT, which is not available in China. Unimpressed users mocked Ernie, the chatbot by search engine giant Baidu. Then came versions by tech firms Tencent and ByteDance, which were dismissed as followers of ChatGPT - but not as good. Washington was confident that it was ahead and wanted to keep it that way. So the Biden administration ramped up restrictions banning the export of advanced chips and technology to China. That's why DeepSeek's launch has astonished Silicon Valley and the world. The firm says its powerful model is far cheaper than the billions US firms have spent on AI. So how did a little-known company - whose founder is being hailed on Chinese social media as an "AI hero" - pull this off? DeepSeek: the Chinese AI app that has the world talking China's DeepSeek AI shakes industry and dents America's swagger Watch DeepSeek AI bot respond to question about China When the US barred the world's leading chip-makers such as Nvidia from selling advanced tech to China, it was certainly a blow. Those chips are essential for building powerful AI models that can perform a range of human tasks, from answering basic queries to solving complex maths problems. DeepSeek's founder Liang Wenfeng described the chip ban as their "main challenge" in interviews with local media. Long before the ban, DeepSeek acquired a "substantial stockpile" of Nvidia A100 chips - estimates range from 10,000 to 50,000 - according to the MIT Technology Review. Leading AI models in the West use an estimated 16,000 specialised chips. But DeepSeek says it trained its AI model using 2,000 such chips, and thousands of lower-grade chips - which is what makes its product cheaper. Some, including US tech billionaire Elon Musk, have questioned this claim, arguing the company cannot reveal how many advanced chips it really used given the restrictions. But experts say Washington's ban brought both challenges and opportunities to the Chinese AI industry. It has "forced Chinese companies like DeepSeek to innovate" so they can do more with less, says Marina Zhang, an associate professor at the University of Technology Sydney. "While these restrictions pose challenges, they have also spurred creativity and resilience, aligning with China's broader policy goals of achieving technological independence." The world's second-largest economy has invested heavily in big tech - from the batteries that power electric vehicles and solar panels, to AI. Turning China into a tech superpower has long been President Xi Jinping's ambition, so Washington's restrictions were also a challenge that Beijing took on. The release of DeepSeek's new model on 20 January, when Donald Trump was sworn in as US president, was deliberate, according to Gregory C Allen, an AI expert at the Center for Strategic and International Studies. "The timing and the way it's being messaged - that's exactly what the Chinese government wants everybody to think - that export controls don't work and that America is not the global leader in AI," says Mr Allen, former director of strategy and policy at the US Department of Defense Joint Artificial Intelligence Center. In recent years the Chinese government has nurtured AI talent, offering scholarships and research grants, and encouraging partnerships between universities and industry. The National Engineering Laboratory for Deep Learning and other state-backed initiatives have helped train thousands of AI specialists, according to Ms Zhang. And China had plenty of bright engineers to recruit. Is China's AI tool DeepSeek as good as it seems? BBC's AI correspondent explains why DeepSeek has caused shockwaves Take DeepSeek's team for instance - Chinese media says it comprises fewer than 140 people, most of whom are what the internet has proudly declared as "home-grown talent" from elite Chinese universities. Western observers missed the emergence of "a new generation of entrepreneurs who prioritise foundational research and long-term technological advancement over quick profits", Ms Zhang says. China's top universities are creating a "rapidly growing AI talent pool" where even managers are often under the age of 35. "Having grown up during China's rapid technological ascent, they are deeply motivated by a drive for self-reliance in innovation," she adds. Deepseek's founder Liang Wenfeng is an example of this - the 40-year-old studied AI at the prestigious Zhejiang University. In an article on the tech outlet 36Kr, people familiar with him say he is "more like a geek rather than a boss". And Chinese media describe him as a "technical idealist" - he insists on keeping DeepSeek as an open-source platform. In fact experts also believe a thriving open-source culture has allowed young start-ups to pool resources and advance faster. Unlike bigger Chinese tech firms, DeepSeek prioritised research, which has allowed for more experimenting, according to experts and people who worked at the company. "The Top 50 talents in this field might not be in China, but we can build people like that here," Mr Liang said in an interview with 36Kr. But experts wonder how much further DeepSeek can go. Ms Zhang says that "new US restrictions may limit access to American user data, potentially impacting how Chinese models like DeepSeek can go global". And others say the US still has a huge advantage, such as, in Mr Allen's words, "their enormous quantity of computing resources" - and it's also unclear how DeepSeek will continue using advanced chips to keep improving the model. But for now, DeepSeek is enjoying its moment in the sun, given that most people in China had never heard of it until this weekend. His sudden fame has seen Mr Liang become a sensation on China's social media, where he is being applauded as one of the "three AI heroes" from southern Guangdong province, which borders Hong Kong. The other two are Zhilin Yang, a leading expert at Tsinghua University, and Kaiming He, who teaches at MIT in the US. DeepSeek has delighted the Chinese internet ahead of Lunar New Year, the country's biggest holiday. It's good news for a beleaguered economy and a tech industry that is bracing for further tariffs and the possible sale of TikTok's US business. "DeepSeek shows us that only if you have the real deal will you stand the test of time," a top-liked Weibo comment reads. "This is the best new year gift. Wish our motherland prosperous and strong," another reads. A "blend of shock and excitement, particularly within the open-source community," is how Wei Sun, principal AI analyst at Counterpoint Research, described the reaction in China. Fiona Zhou, a tech worker in the southern city of Shenzhen, says her social media feed "was suddenly flooded with DeepSeek-related posts yesterday". "People call it 'the glory of made-in-China', and say it shocked Silicon Valley, so I downloaded it to see how good it is." She asked it for "four pillars of [her] destiny", or ba-zi - like a personalised horoscope that is based on the date and time of birth. But to her disappointment, DeepSeek was wrong. While she was given a thorough explanation about its "thinking process", it was not the "four pillars" from her real ba-zi. She says she will still give it another go at work, as it will probably be more useful for such tasks.
Yahoo
27-01-2025
- Business
- Yahoo
What is DeepSeek?
An AI-powered chatbot by the Chinese company DeepSeek has quickly become the most downloaded free app on Apple's store, following its January release in the US. The app's sudden popularity, as well as DeepSeek's reportedly low costs compared to those of US-based AI companies, have thrown financial markets into a spin. Silicon Valley venture capitalist Marc Andreessen has hailed DeepSeek as "one of the most amazing and impressive breakthroughs" in AI. The company says its latest AI models are on par with industry-leading models in the US - like ChatGPT - at a fraction of the cost. Researchers behind the app have said it only took $6m (£4.8m) to build it, much less than the billions spent by AI companies in the US. DeepSeek is a Chinese artificial intelligence company founded in Hangzhou, a city in southeastern China. The company was launched in July 2023 by Liang Wenfeng and funded by the Chinese entrepreneur's hedge fund. It was released in the US on 10 January, according to Sensor Tower. Wenfeng reportedly built up a store of Nvidia A100 chips - which some estimates put at 50,000 - which are now banned from export to China. Experts believe this collection enabled him to launch DeepSeek, by pairing the powerful chips with cheaper, lower-end ones that are still available to import. The company's AI app is available for download in Apple's App Store and online at its website. The service, which is free, has quickly become the top downloaded app on Apple's store, although there have been some reports of people having trouble signing up. It has also become the top-rated free application in the US on Apple's app store. DeepSeek has become popular for its powerful AI assistant which operates similarly to ChatGPT. According to its description on the App Store, it is designed "to answer your questions and enhance your life efficiently". Comments left by users rating the app say "it gives the writing more personality". DeepSeek was reportedly developed for a fraction of the cost of its rivals, raising questions about the future of America's AI dominance and the scale of investments US firms are planning. The company behind ChatGPT - OpenAI - has been a global leader in the burgeoning field and Nvidia has become one of the highest valued companies in the world, when measured by market capitalization. OpenAI CEO Sam Altman joined financial and other firms at a White House event last week, where they pledged to invest $500bn (£400bn) in building AI infrastructure in the US. There are no firm reports on how much it cost to build ChatGPT, but based on reporting from The Information, many people believe it took $540mn, nearly 100 times the cost of DeepSeek. DeepSeek's possibly lower costs roiled financial markets on 27 January, leading the tech-heavy Nasdaq to fall more than 3%. Nvidia was down more than 12% on the morning of 27 January. Microsoft lost roughly 4% percent, and Oracle dipped more than 7%. Sign in to access your portfolio
BBC News
27-01-2025
- Business
- BBC News
What is DeepSeek?
An AI-powered chatbot by the Chinese company DeepSeek has quickly become the most downloaded free app on Apple's store, following its January release in the app's sudden popularity, as well as DeepSeek's reportedly low costs compared to those of US-based AI companies, have thrown financial markets into a Valley venture capitalist Marc Andreessen has hailed DeepSeek as "one of the most amazing and impressive breakthroughs" in company says its latest AI models are on par with industry-leading models in the US - like ChatGPT - at a fraction of the cost. Researchers behind the app have said it only took $6m (£4.8m) to build it, much less than the billions spent by AI companies in the US. What is DeepSeek? DeepSeek is a Chinese artificial intelligence company founded in Hangzhou, a city in southeastern company was launched in July 2023 by Liang Wenfeng and funded by the Chinese entrepreneur's hedge fund. It was released in the US on 10 January, according to Sensor Tower. Wenfeng reportedly built up a store of Nvidia A100 chips - which some estimates put at 50,000 - which are now banned from export to China. Experts believe this collection enabled him to launch DeepSeek, by pairing the powerful chips with cheaper, lower-end ones that are still available to import. Who is using it? The company's AI app is available for download in Apple's App Store and online at its website. The service, which is free, has quickly become the top downloaded app on Apple's store, although there have been some reports of people having trouble signing has also become the top-rated free application in the US on Apple's app store. What does the app do? DeepSeek has become popular for its powerful AI assistant which operates similarly to ChatGPT. According to its description on the App Store, it is designed "to answer your questions and enhance your life efficiently". Comments left by users rating the app say "it gives the writing more personality". DeepSeek's low cost creates concern for America's AI future DeepSeek was reportedly developed for a fraction of the cost of its rivals, raising questions about the future of America's AI dominance and the scale of investments US firms are company behind ChatGPT - OpenAI - has been a global leader in the burgeoning field and Nvidia has become one of the highest valued companies in the world, when measured by market capitalization. OpenAI CEO Sam Altman joined financial and other firms at a White House event last week, where they pledged to invest $500bn (£400bn) in building AI infrastructure in the are no firm reports on how much it cost to build ChatGPT, but based on reporting from The Information, many people believe it took $540mn, nearly 100 times the cost of possibly lower costs roiled financial markets on 27 January, leading the tech-heavy Nasdaq to fall more than 3%. Nvidia was down more than 12% on the morning of 27 January. Microsoft lost roughly 4% percent, and Oracle dipped more than 7%.
Yahoo
27-01-2025
- Business
- Yahoo
Did China's DeepSeek just burst the enterprise AI bubble?
Chinese AI startup DeepSeek has unveiled AI models with comparable features and functionality of some of its most popular US rivals at a fraction of the development cost. The claim has undermined the prevailing idea that AI development requires exponential levels of funding, compute power and energy, calling large US AI investments into question. Markets reacted sharply today (27 January) as tech stocks tumbled at speculation that DeepSeek may have just burst the AI bubble. DeepSeek's claim to have achieved parity with its US rivals at a fraction of the cost was described by veteran technology investor Marc Andreessen as AI's Sputnik moment. Market reaction follows the release of DeepSeek's new model series DeepSeek R1 on 20 January which has seen its mobile app since surge to the top of Apple's iPhone download charts. DeepSeek was founded in 2023 by China's own Sam Altman character, Liang Wenfeng, who also founded the startup's financial backer Chinese hedge fund High-Flyer. Wenfeng is said to have stockpiled Nvidia A100 chips now under Biden era US export restrictions. DeepSeek claims to beat any competition among open-source models and 'rival the most advance closed-source models globally.' The company claims its DeepSeek R1 has a "performance on par with OpenAI-o1". Most critically, the startup claims to have achieved this at a cost of $5.6m, a fraction of the vast sums spent by its US rivals, as well as using far fewer AI chips. GlobalData principal analyst Gavin Sneddon noted that there may questions around the accuracy of DeepSeek's published costings and exactly how open source it is, but if the claims are within an order of magnitude, significant implications still arise. 'As more information emerges about the real development costs incurred by Deepseek, it can be expected that both the government and Big Tech will begin to look more closely at how to measure the return on investment of AI infrastructure going forward,' said Sneddon. The assumption has been that the restrictions on chip, technology and research which western countries, particularly the US have imposed on China would slow down AI development in the country. 'However, while there are conflicting narratives around this, the possibility must now at least be considered that the impact of these measures has been more similar to that of an athlete 'training at altitude' and has, in fact, enhanced the creativity and efficiency of Chinese AI teams who have been forced to deliver against considerable resource constraints,' said Sneddon. According to London School of Economics fellow and director of the European Centre for International Political Economy, Hosuk Lee Makiyama, the focus should not be on how DeepSeek achieved parity with its US rivals, but rather, that OpenAI and other Silicon Valley GenAI services have not yet invented a commercial use-case that justifies the capital raised from investors. 'DeepSeek has maintained a lower pricing thanks to lower costs from training smaller models and cheaper hardware infrastructure – which is largely thanks to US export controls. Ironically, the limitations have made R1 better adapted for the commercial reality of GenAI monetisation and enterprise integration,' said Makiyama. Increasing investor unease at the vast amounts spent on developing AI models in the US has prompted valid questions about return on investment. The cost of building large language models has been passed on to enterprise end users with vendors such as Microsoft charging $30 per seat for its Copilot GenAI feature, for example. GlobalData senior analyst Beatriz Valle notes that Microsoft's GenAI proposition is actually becoming more expensive as there is now a version for $200. 'This may not be sustainable over the longer term. DeepSeek and other startups will be exerting downward pressure on prices for Western counterparts,' said Valle. According to macroeconomic forecasting firm TS Lombard's China expert, Rory Green, the pricing issue is hard to judge at this stage. 'DeepSeek may not trigger immediate price cuts but as the technology is open source it significantly lowers barriers to entry and therefore competition within the GenAI space will increase bringing with it cost reductions for end users,' said Green. The revelation of DeepSeek's capabilities is more broadly the latest example of 'China Shock 2.0', The People's Republic of China's exceptionally rapid movement up the tech value chain, noted Green. "It raises a question we have been talking about for some time – Can anyone beat China? The nation has a historically unique set of characteristics that when combined are making Chinese companies competitive across almost all tech areas,' he said. The announcement of the new Trump administration's $500m AI infrastructure Stargate project last week demonstrates the strategic global importance of AI. And DeepSeek may signal a significant win for President Xi Jinping in the AI arms race between China and the US. China has 30% share of global manufacturing, a developed market level technical ability and emerging market cost. 'It's still cheap,' noted Green. China also has the benefit of enormous state support in areas of finance, politics, human resources, among many others, he added. 'We think the combination will prove very difficult to beat. Last year it was an EV shock, this year AI, next year could be robotics and aviation,' said Green. President Xi Jinping has long been aware of the importance of AI and has outlined his ambition for China to become the world leader in AI by 2030. Broad recognition that AI needed to be led by private sector entrepreneurs rather than government prompted President Xi to assign national AI champions Baidu, Alibaba, Tencent, iFlytek and SenseTime to lead the charge. Ultimately, Chinese competitiveness in areas traditionally dominated by advanced nations will lead to greater trade conflict and national security concerns, warned Green. 'However, the rest of the world, will benefit from cheaper advanced manufactured products, EVs and solar are good existing examples,' he said. "Did China's DeepSeek just burst the enterprise AI bubble?" was originally created and published by Verdict, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
