It has only been two years since the world witnessed a storm when OpenAI’s ChatGPT shook the global AI industry. Little did anyone expect that, in such a short time, ChatGPT would face intense competition from a Chinese AI model—DeepSeek AI. The Chinese company has introduced the DeepSeek-R1 and V3 language models, causing a stir worldwide. This week began with DeepSeek uncrowning ChatGPT, quickly becoming the most downloaded app on Apple’s App Store.

China’s success in overcoming the U.S. ban on exporting high-performance computer chips is truly remarkable. The tech-war has failed. It appears that China either stockpiled the necessary chips before the U.S. ban or, as reported, used lower-performance H-800 Nvidia chips to train its DeepSeek-R1 AI model—a breakthrough that has obviously sent shockwaves through U.S. tech industry, a shock, least expected by the new U.S. President, Donald Trump.

Meanwhile, as tech stocks continue to fall globally, especially with Nvidia’s share price dropping 18%, marking the biggest decline (USD 593 billion) in U.S. stock market history, let’s dive in and understand what’s really happening.

What is DeepSeek AI Model?

DeepSeek, a startup headquartered in Hangzhou, China, is mainly overseen by Liang Wenfeng, who is also a co-founder of the quantitative hedge fund High-Flyer. The extent of High-Flyer’s investment in this Chinese AI model is now unclear. However, Chinese corporate records show that High-Flyer shares office space in the same building as DeepSeek and also holds patents for chip clusters used in AI model training.

DeepSeek specializes in developing open-source large language models (LLMs) aimed at advancing artificial general intelligence (AGI) and making AI technology more accessible globally. Especially the R1 Model, uses a combination of RL (Reinforcement Learning) and Supervised fine-tuning to resolve complex reasoning tasks and matches the performance of o1, OpenAI’s frontier reasoning LLM, across math, coding and reasoning tasks at 95% lesser cost.

Disrupting the Market: The Economic Impact

OpenAI CEO Sam Altman said in 2023 at MIT that LLM GPT-4 cost more than $100 million. In contrast, DeepSeek says it made its new model for less than $6 million. Wow!!! DeepSeek-R1 is available for free download, whereas the equivalent version of ChatGPT comes with a $200 monthly fee.

This decline highlights the broader economic uncertainty as investors reassess the future of AI monetization and hardware demand. With DeepSeek AI making its models open source, it raises concerns about revenue generation, sustainability, and how companies like OpenAI and Google’s DeepMind will respond. Will they be forced to lower their prices? Will the AI industry shift toward open-source accessibility?

“The President was asked about DeepSeek last night on Air Force 1 when he gaggled for the third or fourth time throughout the weekend with members of the traveling press corps. The President said that he believes that this is a wake-up call to the American AI industry. The last administration sat on their hands and allowed China to rapidly develop this AI program,”

US Press Secretary Karoline Leavitt

“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.”

OpenAI CEO Sam Altman

A Boon for AI Democratization

On the contrary, DeepSeek-R1 is also seen as a step toward democratizing artificial intelligence. By offering an advanced language model for free, DeepSeek AI is making Artificial Intelligence more accessible to researchers, students, and businesses worldwide. This accessibility could lead to increased innovation, as more people can experiment with and grow from AI technology without financial constraints.

Furthermore, open-source AI models promote transparency, allowing experts to inspect, refine, and improve the underlying technology. This could lead to greater trust and reliability in AI applications, as opposed to proprietary models with opaque decision-making processes.

“DeepSeek R1 is one of the most amazing and impressive breakthroughs I’ve ever seen – and as open source, a profound gift to the world,”

Venture capitalist Marc Anderseen On X

“DeepSeek has profited from open research and open source (e.g. PyTorch and Llama from Meta). They came up with new ideas and built them on top of other people’s work. Because their work is published and open source, everyone can profit from it. That is the power of open research and open source.”

Yann LeCun- VP & Chief AI Scientist- META

Has DeepSeek linked group unethically collected OpenAI data?

As per reports, Microsoft & OpenAI are investigating internally about unauthorized transfer of data by using OpenAI Application Programing Interface (API). As per rules, Software developers are required to pay for a license to use the API to integrate OpenAI’s proprietary AI models into their own applications.

Microsoft, one of the largest investors in OpenAI & a technology partner, has informed OpenAI of such suspicious activities by some individuals who may have gathered massive data from OpenAI .

There’s substantial evidence that what DeepSeek did here is they distilled knowledge out of OpenAI models and I don’t think OpenAI is very happy about this.

David Sacks, White House A.I. & Crypto Czar

OpenAI has said that there are constant efforts by many companies around world to use their data to advance their own AI models.

“Chinese and other companies were constantly trying to distil the models of leading US AI companies. As we go forward… it is critically important that we are working closely with the US government to best protect the most capable models “

OpenAI

U.S. Ban on Export of Semiconductor, High Performance Chips to China Failed: Tech War Continues

This is a tech war, and it continues. The U.S. has banned the export of semiconductors and high-performance chips, while China has restricted the export of rare earth materials to the U.S. The tech war continues. However, at the moment, China has shown resilience. Despite controversies, ethical concerns, and accusations of data theft, China is disrupting the hegemony of Western tech companies.

U.S. ban to restrict China’s access to advanced semiconductor technologies, high performance chips have encountered a massive setback. Notably, Chinese AI startup DeepSeek has unveiled a low-cost AI model that has shaken leading American AI Companies, achieving this without reliance on top-tier chips. This breakthrough has prompted concerns about the effectiveness of current U.S. export controls and whether more stringent measures are necessary.

A Comparison between ChatGPT & DeepSeek-R1:

How to use DeepSeek-R1 in PC & Mobile Phones:

Here is the process that you can follow to download DeepSeek on your computer.

1. Go to the DeepSeek-R1 website and log in using your email, Gmail, or phone number.
2. After logging in, you’ll be greeted with an interface, allowing you to start using the AI immediately.

DeepSeek-R1 is also now available on mobile platforms, allowing users to access its AI power easily. 

1. Search for the DeepSeek R1 app on the Apple App Store or Google Play Store.
2. Sign in with your email, Gmail, or other supported credentials.
3. The mobile app provides the same robust AI capabilities as the web platform, ensuring a easy experience across all devices.

Ethical Concerns

While the accessibility of DeepSeek-R1 is on the trend, challenges remain regarding data security, misuse, and geopolitical implications. Questions surrounding data privacy and regulatory oversight have surfaced, particularly in Western countries that have historically been cautious about intellectual property secrecy and data theft.

Additionally, the rapid rise of DeepSeek AI could intensify the ongoing AI arms race, prompting governments and corporations to accelerate their AI development efforts including laws to govern the use of Artificial intelligence. This could lead to both breakthroughs and challenges, as ethical considerations and responsible AI governance become more pressing.

As AI technology continues to evolve, one thing is for sure: contest causes innovation. DeepSeek-R1’s influence as evidence that AI dominance is moving away from the U.S.. However, it could also serve as motivation for innovators globally to create their own cost-effective AI technologies. Whether DeepSeek AI will sustain its momentum or cause an industry-wide revolution, is a question only time can answer.