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DeepSeek AI: The buzz around a new Chinese AI startup has been growing rapidly, with the company's name, DeepSeek, now making waves in the tech world. Over the past few days, discussions about DeepSeek and its recently released R1 model have intensified, particularly at the World Economic Forum in Davos. Industry insiders began comparing its performance to AI models from major players like OpenAI and Microsoft. DeepSeek quickly gained recognition on a UC Berkeley-affiliated AI leaderboard, and soon after, interest in the startup soared.

Prominent figures in the tech world, such as investor Marc Andreessen and Meta’s chief AI scientist Yann LeCun, jumped into the conversation. Andreessen called DeepSeek’s breakthrough "one of the most amazing and impressive" he’s seen. By the weekend, DeepSeek’s AI assistant had skyrocketed to the top of Apple’s App Store and was among the top downloads on Google’s Play Store. The surge in interest caused such strain on the company’s systems that the service briefly went down for more than an hour. To cope with the high demand, DeepSeek restricted sign-ups to users with mainland China phone numbers, citing "large-scale malicious attacks" on their platform.

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This rapid surge in popularity had immediate financial consequences. DeepSeek’s model, which it claims was developed at a fraction of the cost of its competitors without compromising performance, triggered a major drop in US and European tech stocks. The stock market rout reached nearly $1 trillion, with AI chipmaker Nvidia suffering a massive $589 billion loss in market value in just one day. While some of the losses were recovered in after-hours trading, the damage was significant.

By Monday, it was evident that DeepSeek’s systems were still struggling to keep up with the unprecedented demand. The company announced that registration was now only available with a mainland China phone number, although it did not clarify whether this would be a temporary measure.

One of the features that set DeepSeek’s assistant apart from competitors like ChatGPT is its transparency: the assistant explains its reasoning before responding to users. This unique attribute has garnered praise in reviews on both Apple’s App Store and Google Play.

Founded by Liang Wenfeng, a quant fund chief, DeepSeek’s open-source AI model is sparking discussions about the massive investments made by companies to stay ahead in the AI race. Jun Rong Yeap from IG Asia noted, "While it remains to be seen if DeepSeek will prove to be a viable, cheaper alternative in the long term, initial worries are centered on whether US tech giants' pricing power is being threatened and if their massive AI spending needs re-evaluation."

However, DeepSeek is not without its controversies. Like many Chinese-made AI models, it self-censors on politically sensitive topics. For instance, it avoids questions about the Tiananmen Square protests, President Xi Jinping, and Taiwan’s sovereignty. This might unsettle international users unfamiliar with Chinese chatbots.

DeepSeek’s early success challenges the prevailing assumption that more advanced AI models require increasing amounts of computing power and energy. This assumption has led to soaring stock prices for companies like Nvidia. While DeepSeek hasn’t fully disclosed its development and energy consumption costs, it has suggested that its expenses were far lower than OpenAI’s latest models. Its ability to build an efficient AI model despite US sanctions on advanced Nvidia chips is raising eyebrows and calling into question the effectiveness of such restrictions.

Computer scientist Kai-Fu Lee highlighted this contrast, stating, "The US is great at research and innovation and especially breakthrough, but China is better at engineering. In this day and age, when you have limited compute power and money, you learn how to build things very efficiently."

For its part, Nvidia has praised DeepSeek’s advancements, calling the model "an excellent AI advancement" and pointing out that it complies with US export restrictions. Nvidia also emphasized that running AI models, which involves processing data and making predictions, still requires significant hardware, especially Nvidia’s GPUs and high-performance networking.

This new AI wave, powered by DeepSeek, is shaking up expectations for what’s possible in AI development—highlighting both the innovation happening in China and the potential shift in how AI is built and used worldwide.

(Includes Agency Inputs)

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