Credit: Pixabay
The Chinese AI startup DeepSeek is making headlines with its powerful chatbot and disruptive business model, shaking up the global AI industry.
A new AI contender has entered the spotlight, and it’s making waves across the tech world. DeepSeek, a Chinese AI startup, has quickly risen to international fame with its chatbot app topping the Apple App Store charts. The company’s compute-efficient AI models have sparked debates about the future of AI development, the U.S. tech industry’s dominance, and the long-term demand for AI chips.
But where did DeepSeek come from, and how did it rise so quickly? Here’s everything you need to know about the AI company that’s disrupting the industry.
DeepSeek’s Origins: From Trading to AI Innovation
DeepSeek isn’t just another AI startup—it has roots in the financial world. The company was originally launched as an AI research division of High-Flyer Capital Management, a Chinese quantitative hedge fund known for using AI to guide trading strategies.
Founded by AI enthusiast Liang Wenfeng in 2015, High-Flyer transitioned into hedge fund management in 2019, leveraging AI for market analysis. By 2023, the firm saw a bigger opportunity in AI beyond finance, spinning off DeepSeek as a separate entity focused on cutting-edge AI research and development.
Despite U.S. export restrictions on high-performance AI chips, DeepSeek built its own data center clusters and trained its models using Nvidia’s H800 chips—a less powerful version of the H100 chips available to U.S. companies.
DeepSeek’s AI Models: Powerful and Cost-Effective
DeepSeek first made a splash in November 2023 with the release of its AI models, including DeepSeek Coder, DeepSeek LLM, and DeepSeek Chat. However, it wasn’t until the launch of DeepSeek-V2 in early 2024 that the company gained serious industry attention.
DeepSeek-V2 proved to be not only a high-performing AI model but also significantly cheaper to run than its competitors. This forced Chinese tech giants like ByteDance and Alibaba to slash their AI model prices to stay competitive.
In December 2024, DeepSeek followed up with DeepSeek-V3, a model that reportedly outperforms Meta’s Llama and even rivals OpenAI’s GPT-4o in certain benchmarks.
But DeepSeek’s most intriguing release came in January 2025—the DeepSeek R1 “reasoning” model. Unlike traditional AI models, R1 is designed to fact-check itself and improve reliability in complex domains like math, science, and logic-based reasoning. While reasoning models tend to be slower, the trade-off is increased accuracy and fewer hallucinations—something AI developers have been striving for.
DeepSeek’s Disruptive Business Model
One of the biggest mysteries surrounding DeepSeek is its business model—or lack thereof. The company prices its AI services far below market value and even gives some away for free.
DeepSeek claims that efficiency breakthroughs have allowed it to keep costs down. However, some industry experts are skeptical about the company’s reported cost advantages. Regardless, developers have embraced DeepSeek’s models, creating over 500 derivative models on Hugging Face, with 2.5 million downloads and counting.
DeepSeek’s Controversies and Challenges
As impressive as DeepSeek’s technology is, it isn’t without controversy. Since it operates in China, its AI models must comply with government regulations, meaning certain politically sensitive topics—such as Tiananmen Square or Taiwan’s autonomy—are off-limits.
Additionally, DeepSeek’s rapid rise has raised concerns in the U.S. about foreign AI influence and potential national security risks. While its future remains uncertain, one thing is clear—DeepSeek has disrupted the AI landscape and put the world on notice.
What’s Next for DeepSeek?
DeepSeek’s success has already rattled the industry, causing Nvidia’s stock to drop 18% and prompting OpenAI CEO Sam Altman to respond publicly. But what happens next?
The company is expected to continue developing more powerful AI models, while its aggressive pricing strategy may push competitors to innovate faster or lower their prices. However, with rising global scrutiny on AI regulation, DeepSeek could face new challenges as governments look to control the influence of foreign AI models.
For now, DeepSeek remains one of the most exciting—and unpredictable—players in the AI race. Whether it will become a long-term industry leader or just a temporary disruptor, only time will tell.
