DeepSeek: The AI Chatbot Disrupting the Industry

DeepSeek has taken the AI world by storm.

The Chinese AI lab behind it, DeepSeek, recently climbed to the top of the Apple App Store and Google Play charts, sparking global curiosity. Its AI models, known for their efficiency, have even led Wall Street analysts to question the U.S.'s dominance in artificial intelligence and the long-term demand for AI chips.

But where did DeepSeek come from, and how did it achieve such rapid success?

The Origins of DeepSeek

DeepSeek traces its roots to High-Flyer Capital Management, a Chinese quantitative hedge fund that leverages AI for trading strategies.

Founded in 2015 by AI enthusiast Liang Wenfeng, High-Flyer launched as a hedge fund in 2019, focusing on AI-powered financial models. By 2023, the firm expanded into artificial intelligence research, establishing DeepSeek as a separate lab dedicated to AI innovation.

Unlike many AI startups, DeepSeek built its own data center clusters for training its models. However, due to U.S. export restrictions, the company was forced to rely on Nvidia’s H800 chips—less powerful than those available to American firms.

DeepSeek is also known for its unconventional hiring strategies. While it actively recruits AI Ph.D. researchers from China's top universities, it also hires individuals without computer science backgrounds to enhance its AI models' understanding of diverse subjects.

DeepSeek’s Breakthrough AI Models

DeepSeek made headlines in November 2023 with the release of its first AI models:

• DeepSeek Coder – Designed for AI-assisted coding.

• DeepSeek LLM – A large language model for general AI tasks.

• DeepSeek Chat – A chatbot for natural conversations.

However, it was the launch of the DeepSeek-V2 model series in early 2024 that cemented its place in the AI industry. This next-generation AI system not only delivered strong performance in text and image analysis but also operated at a fraction of the cost of competing models. In response, Chinese tech giants like ByteDance and Alibaba slashed the prices of their own AI services.

Then, in December 2024, DeepSeek introduced DeepSeek-V3, further solidifying its reputation. Internal benchmarks suggested that DeepSeek-V3 outperformed both open-source models like Meta’s Llama and proprietary models such as OpenAI’s GPT-4o.

The Rise of DeepSeek’s Reasoning AI

In January 2025, DeepSeek unveiled R1, a reasoning-focused AI model designed to improve accuracy and self-verification. Unlike standard AI models, R1 takes extra time—sometimes minutes—to process responses, but this delay results in more reliable outputs, particularly in fields like physics, science, and mathematics.

However, due to its Chinese origins, DeepSeek’s models are subject to government regulations that require them to align with state-approved narratives. As a result, R1 will not answer politically sensitive questions related to topics such as Tiananmen Square or Taiwan’s independence.

A Disruptive Approach to AI

DeepSeek’s business model remains somewhat of a mystery.

Despite enormous interest from venture capital firms, the company has avoided outside investment. It also prices its AI products well below competitors—often offering them for free. DeepSeek attributes this strategy to its efficiency breakthroughs, but some experts remain skeptical of the financial sustainability behind its claims.

Nevertheless, developers have embraced DeepSeek’s models. Though not entirely open-source, DeepSeek licenses its AI with permissive terms, allowing for commercial use. This has led to a surge in derivative models, with over 500 variations of DeepSeek’s R1 emerging on platforms like Hugging Face, amassing more than 2.5 million downloads.

Global Impact and Controversy

DeepSeek’s rise has disrupted the AI industry, challenging tech giants and influencing stock markets.

• In January 2025, Nvidia’s stock price dropped 18%, partly attributed to DeepSeek’s advancements.

• OpenAI CEO Sam Altman publicly responded to DeepSeek’s growing influence.

• Microsoft added DeepSeek to its Azure AI Foundry platform, making it accessible to enterprise customers.

However, not everyone is embracing DeepSeek. Governments and corporations are imposing bans, citing security concerns.

• South Korea has blocked DeepSeek outright.

• New York state banned its use on government devices.

• The U.S. government is considering further restrictions, with reports suggesting an upcoming federal ban on DeepSeek within government systems.

What’s Next for DeepSeek?

DeepSeek’s future remains uncertain. While it continues to refine its models, geopolitical tensions could limit its global reach. The U.S. government’s growing scrutiny of foreign AI firms may present significant challenges.

One thing is clear: DeepSeek has already reshaped the AI landscape. Whether it thrives or faces regulatory roadblocks, its influence on artificial intelligence is undeniable.