DeepSeek has taken the world by storm. In just a short period, the Chinese AI startup has gone from relative obscurity to topping global app charts and rattling some of the biggest names in technology.
With cutting-edge models that rival industry leaders like OpenAI and Meta, DeepSeek is proving that innovation isn’t confined to Silicon Valley.
But how did this company come to dominate the conversation around artificial intelligence? And what does its rise mean for the future of AI?
This article takes a deep dive into DeepSeek’s origins, its groundbreaking AI models, the impact it’s having on the tech industry, and the geopolitical questions it raises.
The Origins of DeepSeek: From Finance to AI Innovation
Before DeepSeek became a household name in AI, it was tied to an entirely different industry: finance. The company traces its roots back to High-Flyer Capital Management, a Chinese quantitative hedge fund that relies on artificial intelligence to guide trading decisions.
High-Flyer was co-founded by Liang Wenfeng in 2015. An AI enthusiast, Wenfeng started exploring algorithmic trading while studying at Zhejiang University. His passion led him to create High-Flyer Capital Management, which officially launched in 2019 as a hedge fund focused on developing AI-powered trading strategies.
However, Wenfeng had bigger ambitions. He saw the potential for AI beyond finance, and in 2023, High-Flyer established DeepSeek as a dedicated AI research lab. Not long after, DeepSeek spun off into its own independent company.
From the beginning, DeepSeek built its own data center clusters to train AI models. This approach allowed it to develop competitive models despite the hardware restrictions imposed by U.S. export bans.
While American AI firms have access to the powerful Nvidia H100 chips, DeepSeek had to rely on the less-powerful H800 model due to U.S. trade restrictions.
Nevertheless, DeepSeek’s team found innovative ways to work around these limitations, demonstrating remarkable efficiency in AI model training.
DeepSeek’s Breakthrough AI Models
While DeepSeek had been quietly making advancements in AI since its founding, it wasn’t until the release of its DeepSeek-V2 model in spring 2024 that the industry started taking notice.
Here’s a timeline of DeepSeek’s major AI developments:
1. DeepSeek Coder (November 2023)
DeepSeek’s first AI release was focused on software development. DeepSeek Coder was an AI-powered coding assistant designed to help developers write and debug code.
2. DeepSeek LLM (December 2023)
Building on the success of its coding model, DeepSeek released DeepSeek LLM, a general-purpose AI model for natural language processing.
3. DeepSeek-V2 (May 2024)
This was the model that changed the game. DeepSeek-V2 outperformed many existing AI models while being significantly cheaper to operate. This forced ByteDance, Alibaba, and other Chinese AI firms to lower their AI service prices, with some even making their models free.
4. DeepSeek-V3 (December 2024)
With 671 billion parameters and a context length of 128,000 tokens, DeepSeek-V3 was a major leap forward. The model’s efficiency and performance put it in direct competition with OpenAI’s GPT-4o and Meta’s Llama 3.
5. DeepSeek R1 (January 2025)
This is the model that catapulted DeepSeek into global headlines. DeepSeek R1 was a reasoning AI, meaning it could analyze and fact-check its own responses before generating answers. This significantly improved accuracy and reliability, especially in math, science, and coding tasks.
According to DeepSeek, R1 performs on par with OpenAI’s o1 model, which had previously been considered the gold standard in AI reasoning. The fact that DeepSeek achieved this at a fraction of the cost sent shockwaves through the tech industry.
6. Janus-Pro-7B (January 2025)
Shortly after launching R1, DeepSeek introduced Janus-Pro-7B, a vision AI model designed for image recognition and generation.
The Cost Disruption: Why DeepSeek is So Cheap
One of the biggest reasons DeepSeek is shaking up the AI landscape is its cost efficiency. While OpenAI’s o1 model reportedly cost over $100 million to train, DeepSeek claims that it trained R1 for just $6 million.
Also read: Most advanced AI models from 2024 and 2025
How did DeepSeek achieve this?
- Innovative Model Training – DeepSeek used reinforcement learning and reward engineering to train its models more efficiently than traditional AI firms.
- Chip Optimization – DeepSeek worked around U.S. chip bans by combining older Nvidia A100 chips with cheaper alternatives, achieving high performance at a lower cost.
- Lower Operational Costs – DeepSeek’s AI models require less memory and compute power, making them cheaper to run.
This cost advantage is a major threat to U.S. AI companies that have built business models around high-priced AI services.
The Global Market Impact: Shaking Up Big Tech
DeepSeek’s rise has had far-reaching consequences across the technology and financial sectors.
1. Nvidia’s Stock Crash
On January 27, 2025, DeepSeek’s rapid success triggered a major sell-off in tech stocks. Investors panicked, questioning whether high-performance AI chips were still essential for leading AI models.
Nvidia’s stock price dropped 17% in a single day, wiping out $600 billion in market capitalization.
2. Microsoft and Meta’s AI Spending Increases
Big Tech scrambled to respond to DeepSeek.
Microsoft integrated DeepSeek into its Azure AI Foundry, and Meta doubled down on AI infrastructure investment to stay competitive.
3. OpenAI and Google Face Pressure
DeepSeek’s cost efficiency has put OpenAI and Google under pressure to lower their AI service prices.
Geopolitical Implications: A New AI Cold War?
DeepSeek’s rise has geopolitical ramifications as well. The U.S. government has taken notice, with President Donald Trump calling it a “wake-up call” for American AI firms.
1. Government Bans and Security Concerns
DeepSeek’s ties to China have raised data security and national security concerns. As a result, multiple governments and organizations have banned its use:
- United States – DeepSeek is banned on government devices in New York, Texas, and federal agencies like NASA.
- Australia and South Korea – Both countries have blocked DeepSeek on security grounds.
- Italy – The Italian government ordered DeepSeek to stop processing citizens’ personal data.
2. China’s Tech Independence
DeepSeek is a major win for China’s efforts to reduce reliance on Western technology.
Chinese state media has celebrated its rise, calling it proof of China’s growing technological self-reliance.
3. The Future of AI Regulation
DeepSeek’s success has intensified debates about AI regulation and global competition.
If a Chinese startup can challenge OpenAI, what does that mean for the future of AI leadership?
Cybersecurity Challenges: DeepSeek Under Attack
DeepSeek’s rise hasn’t been without challenges. On January 27, 2025, the same day its chatbot app hit #1 on the Apple App Store, DeepSeek reported large-scale malicious cyberattacks.
While DeepSeek didn’t specify the nature of the attacks, speculation suggests they were DDoS (Distributed Denial-of-Service) attacks aimed at disrupting its API and chatbot services.
Despite these attacks, DeepSeek has continued to expand and improve its AI offerings.
What’s Next for DeepSeek?
DeepSeek has proven that AI breakthroughs don’t just happen in the U.S. But what’s next for the company?
- Improved AI models – DeepSeek will likely release DeepSeek-V4 and R2, continuing its rapid innovation.
- Expansion into enterprise AI – With Microsoft integrating DeepSeek, more businesses may adopt its models.
- Increased government scrutiny – As DeepSeek grows, it will face more regulatory challenges, particularly in the U.S. and Europe.
DeepSeek’s rise has shattered assumptions about the AI industry. It has forced Big Tech to rethink AI costs, caused stock market turmoil, and sparked geopolitical concerns.
While its future remains uncertain, one thing is clear: DeepSeek is no longer just an upstart. It’s a serious contender in the global AI race.
