Chinese artificial intelligence company DeepSeek came into global focus after it shook up the US stock markets, sending tech companies, especially Nvidia losing $600 billion of its market value on a single day, the highest one-day loss in US history. So, what is this startup that has created such tremors in the market? 

Founded by Chinese entrepreneur Liang Wenfeng, DeepSeek recently gained significant traction with the release of its AI-powered app.

The app, along with all the features provided by its rivals like Microsoft-backed OpenAI’s ChatGPT and Google’s Gemini, also allows users to generate 3D codes for various objects, but at a fraction of its rivals’ costs. It quickly rose in popularity following its launch on January 20, reaching the top of the Apple App Store charts in several countries.

On January 27, it surpassed ChatGPT on Apple’s App Store in terms of downloads.

DeepSeek’s free AI assistant was launched last week, and it claims to use less data and is said to be 95% cheaper than OpenAI rivals like ChatGPT and Gemini, as per reports.

Who is the CEO of DeepSeek?

The company was founded by Liang Wenfeng, co-founder of the Chinese hedge fund High-Flyer. Though High-Flyer was a finance analysis tool, it had reportedly stockpiled GPUs to build supercomputers for deep-learning in data analysis.

Reports suggest that Wenfeng had turned down a lucrative offer at Wall Street to work on DeepSeek.

He reportedly bought 10,000 Nvidia H800 chips to be used at datacentres for his venture in 2021 – Nvidia being the same tech giant whose $593 billion were washed away in the US stock market when DeepSeek surpassed ChatGPT on App Store downloads and US investors started selling their tech stocks.

Liang also reportedly hired top PhDs from Chinese universities, and according to a research paper published by the company, they invented new methods to train their AI models.

His team also tackled the 2022 limitations of exports by the US, and developed their own methods to overcome the limitations.

Reportedly, in an interview last year, he had stated that the AI he would be launching was going to “break the internet”.

What Deepseek can and can’t do?

DeepSeek’s AI model, despite being trained at a significantly lower cost than many of its Western counterparts, has shown impressive performance in areas like mathematics, coding, and natural language reasoning. 

However, the app has been criticised for its limitations. For example, it often fails to provide information on sensitive political topics related to the Chinese government, such as the  history of Tiananmen Square or the status of Arunachal Pradesh or even when asked about naming all Indian states.

For sensitive topics, DeepSeek simply shows, “This is beyond my current scope. Let’s talk about something else.”

How does Deepseek compare to other AI models like OpenAI and Gemini?

Compared to OpenAI and Gemini, which can be used efficiently for free with just a login, DeepSeek’s new AI often shows “server busy” messages, suggesting potential limitations in its infrastructure, or the new influx of high-flow traffic garnered by its popularity.

The paid version of the Deepseek app works well, as per the user-reviews on the internet. 

DeepSeek also claimed to have been built and run at a fraction of the cost of its rivals. The DeepSeek, however, is open-source, compared to its more-known rivals.

User reviews

Many users have praised the app, with some commenting:

“This is a great app, even better than OpenAI.”

“It’s a low-budget but excellent application.”

However, other users have expressed concerns, with one review stating:

“This model is quite biased and inaccurate with its search results, especially when it comes to political questions related to the Chinese government.”

Others criticised the app’s interface, with one reviewer saying:

“The interface is really bad, and the app has a lot of bugs.”

Effect on market after launch of Deepseek

DeepSeek, a Chinese artificial intelligence (AI) model triggered a steep selloff in US semiconductor companies, bringing the markets slumping. 

On January 27, the Nasdaq went down by 3.1% thanks to Nvidia’s 17% slump, noted the reports. Not only Nvidia, but chip maker Broadcom also went down by 17.4%, Microsoft that backs ChatGPT went down by 2.1%, and Alphabet – the parent company of Gemini’s Google – went down by 4.2%.