A Chinese AI startup DeepSeek made headlines as its chatbot became the most downloaded free app on Apple's US App Store, surpassing OpenAI's ChatGPT. This unexpected surge has caught the attention of America's tech sector, shaking the competitive landscape of the AI industry.
DeepSeek became the most downloaded free app on Apple's US App Store over the weekend. As reported by the Reuters on Monday, the launch of this Chinese AI chatbot sparked a significant sell-off of major tech stocks, which faced a sharp decline amid concerns over America's dominance in the AI industry. Also, the company claimed to have trained the model on Nvidia's lower-capability H800 processor chips with a budget of less than $6 million.
DeepSeek's cost-effective, high-performance model has sparked a significant buzz across the tech industry. Pat Gelsinger, the Electrictrical Engineer expert and former Tntel CEO posts a long note on X thanking DeepSeek team for their great work.
“Wisdom is learning the lessons we thought we already knew. DeepSeek reminds us of three important learnings from computing history: 1) Computing obeys the gas law. Making it dramatically cheaper will expand the market for it. The markets are getting it wrong, this will make AI much more broadly deployed. 2) Engineering is about constraints. The Chinese engineers had limited resources, and they had to find creative solutions. 3) Open Wins. DeepSeek will help reset the increasingly closed world of foundational AI model work. Thank you DeepSeek team.”
Hereby, Marc Andreessen, the Venture capitalist said it right on X, “Deepseek R1 is AI's Sputnik moment.”
According to the brand's official website, DeepSeek-V3 has made a significant "breakthrough in inference speed" compared to previous models. The company further asserts that it "leads the leaderboard among open-source models and competes with the most advanced closed-source models worldwide."
Vivek Tyagi, Managing Director – Sales, Analog Device, Semiconductors industry professional and Past Chairman India Electronics & Semiconductor Industry also, shared his views on the latest chatbot performance on LinkedIn, “Looking at Deepseek able to perform as good or better than GPT4 at fraction of the compute and GPU cost of GPT4, my friend "Vinay" asked Chat GPT to create a picture which is posted below.”
Giving a sneek peek on the expenditure by OpenAI he further wrote, “OpenAI, Anthropic, etc. spend $100M+ just on compute. They need massive data centers with thousands of $40K GPUs. It's like needing a whole power plant to run a factory.”
“DeepSeek just showed up and said "What if we did this for $5M instead?" And they didn't just talk - they actually DID it. Their models match or beat GPT-4 and Claude on many tasks.
How? They rethought everything from the ground up. Traditional AI is like writing every number with 32 decimal places. DeepSeek was like "what if we just used 8? It's still accurate enough!" Boom - 75% less memory needed.
Then there's their "multi-token" system. Normal AI reads like a first-grader: "The... cat... sat..." DeepSeek reads in whole phrases at once. 2x faster, 90% as accurate. When you're processing billions of words, this MATTERS.
Traditional models? All 1.8 trillion parameters active ALL THE TIME. DeepSeek? 671B total but only 37B active at once. It's like having a huge team but only calling in the experts you actually need for each task,” he added.
Decoding the cost associated with the chatbot, he said “the results are mind-blowing.” He also gave the details of the value that DeepSeek's advancements have significantly reduced AI development costs and resource requirements. Training expenses have dropped from $100 million to just $5 million, while the number of GPUs required has decreased from 100,000 to 2,000. Additionally, API costs are now 95% cheaper, and models can run on gaming GPUs instead of expensive data center hardware. With its open-source approach, the implications are transformative—making AI development more accessible, fostering increased competition, and drastically lowering hardware requirements and costs. This breakthrough marks a pivotal shift in AI research and deployment.
About DeepSeek
DeepSeek is a China based chatbot emerged in late 2023, via a university startup by Liang Wenfeng. The ideology it works is to develop artificial general intelligence. It simply means that they want to achieve human level intelligence that no other competitor has achieved so far. For that, computer scientists of this firm have approached differently to build this AI model, apparently lowering the cost than the competition. The architecture of this chatbot is build on MoE and currently 37B Params are activated from the total 671 Params, as stated on its official site. This represents high combination for fluid conversation with the chatbot.
As per the reports, DeepSeek trained its model leveraging around 2,000 Nvidia H800 GPUs for over two-month period, costing around $5.5 million. It released a research paper demonstrating that their latest model can performance rival to the most progressive reasoning models. The techbot also stated that it has introduced its first-generation reasoning models – DeepSeek-R1-Zero and DeepSeek-R1, where the first one is trained on large-scale reinforcement learning (RL) responsible for remarkable reasoning capabilities.
Sam Altman, CEO of OpenAI said on X, “deepseek's r1 is an impressive model, particularly around what they're able to deliver for the price. we will obviously deliver much better models and also it's legit invigorating to have a new competitor! we will pull up some releases.”
The Nvidia Connection
Nvidia, according to Reuters, in a statement said that it shares dropped 17% which is $118.58 using way fewer Nvidia chips as compared to US firms.
"DeepSeek’s work illustrates how new models can be created using that technique, leveraging widely-available models and compute that is fully export control compliant," Nvidia said in its statement.
"DeepSeek didn't come out of nowhere - they've been at model-building for years," a senior adviser to the RAND Corp for technology analysis, said Reuters. "It's been long known that DeepSeek has a really good team, and if they had access to even more compute, God knows how capable they would be."
While DeepSeek was reportedly, on Monday, struggling to cope up with the surge in new users which is called “inference” in among AI firms, indicating that Nvidia chips will stay in demand. "Inference requires significant numbers of Nvidia GPUs and high-performance networking," Nvidia said in its statement.
DeepSeek Cyberattacked
Amid the growing demand in the US, Chinese startup DeepSeek announced on Monday that it will temporarily restrict new registrations following a cyberattack triggered by the rapid rise in the popularity of its AI assistant.
As per Reuters reports, earlier in the day, the company's website experienced outages after the AI assistant became the top free app on Apple's U.S. App Store. However, technical issues involving the application programming interface and user login problems were resolved. This marked the company's biggest outage, coinciding with the AI assistant's soaring popularity.
A Wake Up Call For American Tech Companies
The development underscores China's advancing capabilities in AI technology and highlights the global demand for innovative conversational AI solutions. With the AI space becoming increasingly dynamic, the rise of this Chinese chatbot serves as a wake-up call for American tech companies to stay ahead in the race for AI dominance.
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