All you need to know about DeepSeek and why did tech prices in the US drop? (Summary) #DeepSeek #DeepSeekR1 

What does DeepSeek do? 

Artificial intelligence (AI) company DeepSeek is based in Hangzhou, China. It grew out of a university startup a couple of years ago. There is a term for a level of intelligence that no technology company has yet reached: "artificial general intelligence." That is what the company says its goal is. It's not quite there yet, but this could be one reason why DeepSeek's computer scientists built their AI model in a different way. As a result, it seems to be much cheaper to run than its US competitors.  
 
Another possible reason for its low-cost approach is that Chinese computer scientists have had to work around restrictions put in place by the US government on the amount of computer chips they can use for a long time.  
 
Why did we not know about it before?  

For a while now, the company has been quietly exciting the AI world with its technical innovations. For example, its cost-to-performance ratio is several times lower than that of models made by Meta (Llama) and OpenAI (Chat GPT). Silicon Valley companies have been making a lot of noise about how big their breakthroughs could be. They've been announcing new products nonstop for months now, as they get more and more worried about finally getting their multibillion-dollar investments back. But you'll see more of DeepSeek's happy blue whale logo as more and more people around the world try it out. 
 
What is this R1 type we've been hearing about? 

At the moment, this is the DeepSeek AI model that everyone is most excited about. It promises to be on par with OpenAI's o1 model, which was made available to Chat GPT users in December. In the UK and other places around the world on Monday, it was the most downloaded free app from Apple's app shop.   
 
Sure, there are many AI models out there from OpenAI, Google, Meta, and more. What's the big deal? 

This model's internal architecture is different, and it needs less memory. This means that every search or contact with the chatbot-style system takes a lot less computing power. Researchers have praised it for being able to handle difficult reasoning problems, especially in math and coding, and it seems to be getting results that are on par with competitors for a lot less computer power. Although DeepSeek says it only took two months and less than $6m (£4.8m) to make the model, some experts say this is probably too low. Even so, it costs a lot less to run than the billions of dollars that tech companies in Silicon Valley are spending to make AIs.  
 
Who is in charge? 

Someone important is Liang Wenfeng. He used to run a Chinese quantitative hedge fund that now gives money to DeepSeek. In a rare interview, he said, "For many years, Chinese companies have been used to other people coming up with new technologies while we focused on making money off of applications. But this isn't going to happen forever." We are not starting this wave with the goal of making quick money, but rather to push the limits of technology and guide the growth of the whole ecosystem... We think that as the economy grows, China should slowly start to contribute instead of just taking advantage of it. 
 
Why did tech stocks in the US go down? 

Big tech stocks lost hundreds of billions of dollars after word got out about how well the DeepSeek robot worked over the weekend. Recently, US tech companies promised hundreds of billions of dollars more to invest in AI. A lot of this money, most people thought, would go toward building the computer systems and energy sources needed to reach the goal of artificial general intelligence. At least that story seems to be called into question by DeepSeek's results. 
 
What does Nvidia have to worry about? 

For Nvidia, the AI boom has been very good for business. The company used to make graphics cards for video games, but now it makes most of the chips that the AI business needs. It's been compared to a small business in California in the 1800s that sold pickaxes and buckets. That business was right there when the gold rush happened, so it became a huge supplier to the world's biggest industry. When tech companies look at DeepSeek from the side, they probably wonder if they need to buy as many of Nvidia's tools. It lost $600bn in market value on Monday.  
 
What does DeepSeek not do? 

It hasn't hit artificial general intelligence yet, which is the level where AI can start to reason and is being worked on by OpenAI and others in Silicon Valley. OpenAI's CEO, Sam Altman, has warned that a breakthrough is not likely to happen soon. But it looks like it can do what other ones can for a lot less money. 
 
Is it good that DeepSeek is becoming more popular? 

It's possible that advanced AI skills can now be reached without the huge amounts of computing power, microchips, energy, and cooling water that were once thought to be needed. Time will help show how important this technical advance really is, as it always does.