Deep Seek a Chinese AI start-up that nervous Chatgpt Nvidia and surprised the AI world

Deep Seek’s success has shaken the broadly held belief that heavy billions of dollars into AI chip investments pledge dominance

The announcement of a less capital-intensive artificial intelligence model from China’s Deep Seeks a chill through the US stock market.

What is Deep Seek AI?

Deep Seek new AI Assistant launched on January 20th, quickly became the most downloaded free app on the Apple Store.

Deep Seek follows China’s strict censorship rules. When asked about sensitive topics, it stops giving direct answers, reflecting government control over digital content.

Deep Seek developed an AI model that claims to rival Open AI’s offering but a fraction of the cost.

Deep Seek says it has been able to do this cheap research behind it trained its model for just $6 million lower than the valued $100 million expenditure behind Open AI’s GPT-4

Who is Liang Wenfeng?

?Deep Seek which is based in Hangzhou was founded in late 2023 by Liang Wenfeng a serial entrepreneur who also runs the hedge fund High-Flyer.

Liang Wenfeng, a Zhejiang University graduate with a background in electronic engineering and computer science, built his reputation in the fiancé sector before venturing into AI.

In 2019 High-Flyer Hedge fund became the first quant hedge fund in China to raise over 100 billion yuan ($13m)

He has been vocal about China's need to innovate rather than imitate claiming that the real gap between Chinese and American AI lies in originality.

His ambition aligns with Chinese President Xi Jinping's push to make AI a national priority.

Big Turning Point Tech Crash Market

The 13% plunge in Nvidia shares fueled by investor worries about Chinese AI startup Deep Seek wiped a record amount of stock market value from the world’s largest company?

According to Bloomberg News Nvidia shares tumbled after the opening bell Monday erasing about $465 bn from the company's market value

The previous record was a 9% drop in September that wiped out $279 bn in value and was the biggest in US stock market history.

Nvidia has sold off with the shares now down 13.5% wiping down more than $400bn off its market value.

The Nasdaq tumbled by more than 700 points to 19,250 as the US chipmaker Nvidia fell by 12.3% wiping $380 bn off the company's market value and taking it to $3.1tn

Microsoft, Meta platform, and Google parent Alphabet lost between 2.2% and AI server Dell technology and Super micro computer slid by 7.2%

Deep Seek “Sputnik moment”

The scale of Deep Sleek innovation has led to evaluation with the Soviet Union launch of Sputnik in 1957 a moment that catalyzed the space race.

Silicon Valley heavyweight Marc Andreessen called the R1 model the “AI Sputnik moment” and “one of the most amazing breakthroughs in the field.

In China Deep Seek's success was hailed as a national triumph Zhou Hongyi, the CEO of Chinese cyber security firm Qihoo 360, declared that the company had “upended the world”.

Others called it proof that China was closing the gap with the US in AI technology.

Global Consequences US and China

Deep Seek innovation success has broader geopolitical ramifications. The US has sought to stop China's AI development through export controls and sanctions that limit the use of cutting-edge chips and technology.

Deep Seek measures have not failed but many have spurred innovations. Chinese firms like Deep Seek are proving that they compete with and possibly surpass their US counterparts.

US President Donald Trump describes the development as a “wake-up call” for US industries.

“Instead of spending billions and billions, you’ll spend less, and you’ll come up with hopefully the same solutions”

Impact on Silicon Valley AI Giants ?

Deep Seek innovation success for years, firms like Google, Microsoft, and Open AI have built their dominance on the premise that AI requires more capital expenditure.

?Nvidia has sold billions of dollars worth of high-end GPU becoming a linchpin of the AI revolution. But Deep Seek claims that the demand for such hardware could decline the economic model that has driven the industry's high growth.

Open AI CEO Sam Altman called the R1 model “an impressive competitor” to accelerate his company product. ?Microsoft CEO Satya Nadella argued that cheaper AI would democratize access and drive border adoption, benefit to economy.

?New Economic of AI

?The Deep Seek announcement has forced a revaluation of the economics of AI. For years the development of large language models (LLM) has been featured by ballooning cost resource process.

Meanwhile, Anthropic CEO Dario Amodei suggested that some models are approaching $ 1 billion in development costs.

This shift could benefit smaller players and startups. It also raises questions about the billions Silicon Valley giants have already spent on infrastructure and data centers.

Microsoft Probing Deep Seek

Microsoft Corp.?and Open AI are investigating whether data output from Open AI’s technology was obtained in an unauthorized manner by a group linked

Microsoft’s security researchers in the fall observed individuals they believe may be linked to Deep Seek exfiltrating a large amount of data using the Open AI application programming interface

Open AI did not respond to a request for comment, and Microsoft declined to comment. Deep did not immediately respond to requests for comment via email.

David Sacks, President Donald Trump’s artificial intelligence tsar, said on Tuesday that there was “substantial evidence” that Deep Seek leaned on the output of Open AI’s models to help develop its technology

In a statement responding to Mr Sacks’ comments, Open AI did not directly address his comments about Deep Seek. “We know PRC-based companies and others are constantly trying to still the models of leading US AI companies,”

An Open AI spokesperson said, referring to the People’s Republic of China.

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