DeepSeek – the Chinese answer to AI

We’re living in a time of great technology advancements achieved at enormously fast speed. DeepSeek continues to change how we look at AI as well as how the future might look for all of us.

Currently, training top AI LLM models is extremely expensive. It requires massive data centers with thousands of $40K GPU (Graphic Processing Units) as well as massive computing power. It’s like needing an entire power plant to run one factory – expensive to say the least.

Along comes a Chinese upstart that shakes up the prevailing AI providers. DeepSeek was launched at the paltry sum of $5 Million dollars and it can match or beat Chat GPT-4 and Anthropic’s Claude on many tasks.

How did they do this? (getting slightly geeky here)
Apparently, they rethought everything from the ground up. Traditional AI is like writing out every number with 32 decimal places. DeepSeek said “what if we just used 8? It’s still going to be accurate enough with 75% less memory needed. The DeepSeek designers built an “expert system and instead of one massive AI trying to know everything (like having one person be a doctor, lawyer, AND engineer), they have specialized experts that only wake up when needed.

With traditional AI models, all 1.8 trillion parameters are active ALL THE TIME.  DeepSeek has 671B total but only 37B active at once.  It’s like having a huge team but only calling in the experts you actually need for each task.

The results are fascinating when you compare traditional AI to DeekSeek:
* Training cost: $100M → $5M
* GPUs needed: 100,000 → 2,000
* API (Application Programming Interface) costs: 95% cheaper
* Can run on gaming GPUs instead of dedicated data center hardware.

And it’s all open source. Anyone can check their work because the code is available to the public. The technical papers explain everything. It’s not magic, just incredibly clever engineering.

China’s DeepSeek is making waves in the global AI landscape, thanks to its affordability and better performance than much-established rivals. The advanced AI chatbot app, offering interactive conversations, is available for free on both Google Play Store and Apple App Store, making it easily accessible for users.

Why does this matter?
Because it breaks the model of “only huge tech companies can play in the AI development space.” You don’t need a billion-dollar data center anymore. A few good GPUs might do it. For Nvidia, this is scary as their recent stock market drop (it plunged 17% resulting in a nearly $600 BILLION market cap loss) indicated. Their entire business model is built on selling super expensive GPUs with 90% margins. If everyone can suddenly do AI with regular gaming GPUs… well, you see the problem. And here’s the kicker: DeepSeek did this with a team of fewer than 200 people. Meanwhile, Meta has teams where the compensation alone exceeds DeepSeek’s entire training budget… and their models are not as good.

This is a classic disruption story:
Incumbents optimize existing processes, while disruptors rethink the fundamental approach. DeepSeek asked “what if we just did this smarter instead of throwing more money and hardware at it?”. And it’s a common belief that China can and will ALWAYS build something cheaper?

The implications are huge:
* AI development becomes more accessible
* Competition increases dramatically
* The “moats” of big tech companies look more like puddles
* Hardware requirements (and costs) plummet

Of course, giants like OpenAI and Anthropic won’t stand still. They’re probably already implementing these innovations. But the efficiency genie is out of the bottle – there’s no going back to the “just throw more GPUs at it” approach.

Final thoughts: This feels like one of those moments we’ll look back on as a turning point. Like when personal PCs made mainframes less relevant, or when cloud computing changed everything. AI is about to become a lot more accessible, and a lot less expensive. The question isn’t if this will disrupt the current players, but how quickly.

Now we need to take a step back and define how we will secure this technology to protect the end users. The Trump administration is scrutinizing the AI app, the US Navy, Congress, Pentagon, NASA,  Italy, Taiwan and New York have outright banned it and hundreds of corporations have blocked it as well. A major red flag is spelled out in DeeSeeks terms of service which clearly states that user data is stored on servers in China and governed under Chinese law, which mandates cooperation with the country’s intelligence agencies. Remember NOTHING is ever truly FREE – there’s always a cost!

Special thanks to my wonderful wife Pam for sending me DeepSeek information since day one!

Tech Crunch
https://techcrunch.com/2025/02/03/deepseek-the-countries-and-agencies-that-have-banned-the-ai-companys-tech/