DeepSeek introduced R1, a ChatGPT-like AI model. R1 has all the familiar abilities in Chat GPT.  It operates at a much lower cost than models from OpenAI, Google, or Meta. DeepSeek spent only $5.6 million on computing power for its base model. In contrast, US companies spend hundreds of millions or even billions on AI. And DeepSeek is a one-year-old Startup.

What is DeepSeek?

source : relaince tech

DeepSeek, a two-year-old AI startup, is led by CEO Liang Wenfeng. It was created from a hedge fund started by engineers from Zhejiang University. The company focuses on new ideas in architecture and algorithms to develop artificial general intelligence (AGI), according to Liang. Unlike OpenAI, DeepSeek says it is profitable.

DeepSeek released two AI models in a short time period. This puts it on par with top U.S. labs, says Scale AI CEO Alexandr Wang. It trained models at a much lower cost. One model cost just $5.6 million to train. That’s about an AI expert’s salary in the U.S. Last year, AI training costs ranged from $100 million to $1 billion. OpenAI’s GPT-4 cost over $100 million. DeepSeek may have changed how we see AI costs, shaking up the industry.

Microsoft’s data breach concerns

Microsoft’s security researchers noticed individuals linked to DeepSeek transferring large amounts of data through OpenAI’s API. The API lets developers and companies use OpenAI’s technology in their apps. As OpenAI’s biggest investor, Microsoft flagged the activity. This led to an internal review. If proven, this could be a major intellectual property breach, intensifying AI tensions between the U.S. and China. It raises concerns about how AI companies protect their data and whether such incidents will lead to stricter regulations on AI development.

Market impact on NVIDIA

NVIDIA’s share price dropped 17% on January 27, 2025. This wiped out nearly $600 billion in market value. The sell-off was sparked by DeepSeek’s announcement of its R1 AI model. R1 reportedly matches Western models but costs much less. DeepSeek’s breakthrough has raised concerns about the demand for high-performance AI chips. These chips are central to NVIDIA’s business. The model was developed using stockpiled NVIDIA GPUs. This development shook the semiconductor sector, impacting other major companies.

DeepSeek is reshaping the AI landscape — but not without controversy. As it challenges major players like OpenAI and Microsoft, it raises critical questions about data security, ethics, and government influence. The world is watching closely, weighing the benefits of innovation against the risks of misinformation and control.