DeepSeek: The Chinese AI Startup

The global AI race gained momentum after OpenAI’s ChatGPT launched in late 2022, prompting Chinese tech firms to accelerate their AI development. Initial efforts by industry giants like Baidu faced criticism for lagging behind their U.S. counterparts. However, DeepSeek has flipped the script with its high-performing, cost-efficient AI models, DeepSeek-V3 and DeepSeek-R1.

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DeepSeek-V3 has gained international acclaim for its performance, achieved using less than $6 million worth of computing power from Nvidia H800 chips. By comparison, U.S.-based companies invest billions in training their AI models. The company claims that DeepSeek-R1, released recently, is 20 to 50 times cheaper to operate than OpenAI’s most advanced models, depending on the task.

DeepSeek’s AI Assistant, powered by DeepSeek-V3, has already overtaken ChatGPT to become the top-rated free app on Apple’s App Store in the United States, signaling its growing influence.

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Skepticism and Controversy

Despite its success, DeepSeek has faced scrutiny and skepticism. Some analysts question the startup’s claims about training costs and resource use. Scale AI CEO Alexandr Wang suggested that DeepSeek might have access to 50,000 Nvidia H100 chips, a claim that would violate U.S. export restrictions on advanced AI chips. DeepSeek has yet to comment on these allegations.

Further doubts were raised by Bernstein analysts, who highlighted inconsistencies in the reported training costs for DeepSeek’s models. While the company claims to have spent $5.58 million on computing power for DeepSeek-V3, analysts believe the actual figure may be significantly higher.

The Visionary Behind DeepSeek

DeepSeek was founded in 2023 by Liang Wenfeng, co-founder of the quantitative hedge fund High-Flyer. Liang’s transition from finance to artificial intelligence reflects his ambition to explore Artificial General Intelligence (AGI), autonomous systems that surpass human capabilities in most tasks.

High-Flyer has played a critical role in DeepSeek’s development, leveraging its resources and expertise. The hedge fund owns patents related to chip clusters used for AI training and operates a cluster of 10,000 A100 chips, highlighting its commitment to DeepSeek’s mission.

Beijing’s Backing and Strategic Importance

DeepSeek’s success has not gone unnoticed by China’s political leadership. On January 20, 2025, the day DeepSeek-R1 was publicly released, founder Liang Wenfeng attended a closed-door symposium hosted by Chinese Premier Li Qiang. This high-profile recognition underscores Beijing’s support for DeepSeek’s contributions to achieving self-sufficiency in AI technologies, a strategic priority for the nation amid escalating U.S.-China tensions.

China’s government has long sought to counteract Washington’s export controls and reduce reliance on foreign technology. DeepSeek’s advancements align with these objectives, positioning the startup as a key player in China’s AI ambitions.

The Future of DeepSeek and Global AI

DeepSeek’s innovative models are already disrupting the AI industry by offering superior performance at significantly lower costs. If the company continues to scale and improve its technology, it could challenge established players like OpenAI and Meta on a global level.

However, challenges remain. DeepSeek must address concerns about transparency and legitimacy while navigating geopolitical tensions that could impact its access to critical resources. Additionally, as the AI industry becomes increasingly competitive, maintaining cost efficiency without compromising quality will be crucial.

DeepSeek represents a pivotal moment in the global AI race, proving that Chinese companies can rival and potentially surpass U.S. tech giants. With its focus on affordability, innovation, and strategic alignment with China’s national goals, DeepSeek is poised to become a major disruptor in the AI industry.

As the startup continues to gain traction, its journey will be closely watched by industry leaders, policymakers, and tech enthusiasts worldwide. Whether DeepSeek can maintain its momentum and redefine the global AI landscape remains to be seen, but one thing is certain: the future of AI just got a lot more competitive.