DeepSeek vs. ChatGPT: Innovation Meets Affordability in the AI Race

A Chinese AI model named DeepSeek has become the most downloaded app on the Apple Store and stunned both investors and industry experts. Its speedy growth has even affected world markets as several tech stocks have witnessed a downfall.

The latest version of the DeepSeek was released on January 20, quickly captured the attention of AI specialists before going viral in the greater field of technology.

This development has been termed by former US President Donald Trump as a “wake-up call” for American companies to focus on remaining competitive.

What is special about DeepSeek is that it said it cost much less to develop than the high-end AI models from companies such as OpenAI: it works well enough without tens of thousands of the most advanced chips. That innovation has set off alarm bells for US chipmaker Nvidia, whose market value tumbled by a record $600 billion on Monday-the biggest one-day loss in U.S. history.

The success of DeepSeek marks further challenges for the US in trying to restrict China’s technology progress, including preventing the exportation of high-end chips to Beijing. However, China remains relentless, with President Xi Jinping identifying AI as a priority for the country. Companies like DeepSeek are leading the charge as China moves away from its traditional manufacturing model to high-tech innovations, like AI, electric automobiles, and semiconductor chips.

What is Artificial Intelligence?

Artificial Intelligence, or AI, is technology that assists computers in sometimes simulating human behavior.

It operates based on the principle of teaching machines to learn from massive amounts of data and making inferences based on patterns, enabling them to solve problems and make decisions. For instance, AI can converse like a human or make a prediction of what you might be interested in buying.

In recent years, AI has gained fame due to powering the likes of ChatGPT and DeepSeek in a category called Generative AI. These programs take massive amounts of online text and images to learn and create new content, like writing or answering questions. However, they’re not perfect: they can make mistakes, spread false information, or show biases from the data they were trained on.

Most of the people use tools like ChatGPT for everyday tasks such as writing emails, summarizing text, answering questions, or even learning to code or study.

What is DeepSeek?

DeepSeek is a free AI-powered chatbot that works a lot like ChatGPT. People use it for similar tasks, such as answering questions, helping with math, or coding. While it’s still debated how well it performs compared to its competitors, it’s reportedly as powerful as OpenAI’s o1 model, known for its reasoning abilities.

DeepSeek stands out because it uses less memory and costs less to operate than similar AI tools. Its creators claim it was developed for just $6 million, much cheaper than the $100 million it reportedly cost OpenAI to train GPT-4.

 A main difference here is that, just like any other Chinese AI models (like Baidu’s Ernie or ByteDance’s Doubao), DeepSeek also does not mention politically sensitive topics. To give a simple example, when someone asked it a question about what occurred in the Tiananmen Square on June 4, 1989, it answered by saying: “I’m sorry, but I cannot answer that. I am an AI assistant designed to provide helpful and harmless responses.

 This form of censorship can limit the appeal of DeepSeek globally, but its developers use authentic data to train the base model, while adding a layer to block sensitive content.

 It has been reportedly developed with a mix of advanced Nvidia A100 chips banned from export to China since 2022 and more inexpensive chips. The founder of DeepSeek is estimated to have stocked up approximately 50,000 of these chips, allowing him to make an AI like this at lower costs.

Despite its success—it recently became the most downloaded free app on Apple’s US App Store—DeepSeek has faced challenges. On the same day it hit this milestone, it was targeted by malicious attacks, causing the company to temporarily limit registrations. Additionally, its website experienced outages on Monday.

Who is behind DeepSeek?

DeepSeek was founded in December 2023 by Liang Wenfeng, who released the company’s first AI model the following year. Liang, a graduate of Zhejiang University with degrees in electronic information engineering and computer science, has now become a global figure in the AI industry.

Liang has a background in finance and currently serves as the chief executive of High-Flyer, a hedge fund using AI to create a quant model that is using analyzed financial data to make investment choices. In 2019, High-Flyer became China’s first quant hedge fund to raise more than 100 billion yuan ($13 million).

Liang had said in a 2019 speech that China could potentially overtake the US in terms of quantity in trading. Recently, however, he focused on the issue of innovation with AI and called for China to shift from imitation to originality if it wishes to lead the AI race worldwide.

When asked why DeepSeek surprised Silicon Valley, Liang answered: “Their surprise comes from seeing a Chinese company not just following but innovating. This is a shift from what most Chinese firms are used to.” 

Is DeepSeek Secure?

Some concerns regarding the security of the app have been reported. Australia’s science minister, Ed Husic, has warned about issues like data privacy and quality, advising people to be cautious when using such platforms.

The success of DeepSeek questions whether AI advancements can only be done with large budgets and cutting-edge chips. Creating a powerful AI model with fewer resources has made uncertainty about the future of high-performance chips.

According to an AI analyst, Wei Sun, “DeepSeek has shown that leading AI models can be developed without relying on expensive compute resources.” This shift has put pressure on companies like Nvidia, which saw its stock price drop 17% on Monday, wiping out $600 billion in market value. Nvidia, once the world’s most valuable company, fell to third place behind Apple and Microsoft.