What is DeepSeek and why is it gaining so much attention?

To understand why DeepSeek has made such a stir, it helps to start with AI and its capability to make a computer seem like a person.

Artificial intelligence (AI) is the ability to make a computer appear human by learning and solving problems using massive amounts of information. It’s best known for chatbots like ChatGPT and DeepSeek, which learn from vast data. However, AI can create falsehoods and repeat biases. Millions use AI tools for everyday tasks, coding, and studying.

What is DeepSeek?

DeepSeek is a free AI-powered chatbot that resembles ChatGPT and is reportedly as powerful as OpenAI’s o1 model in tasks like mathematics and coding. It costs $6m to train, a fraction of OpenAI’s over $100m. DeepSeek has been able to minimize the impact of US restrictions on powerful chips reaching China by combining Nvidia A100 chips with cheaper, less sophisticated ones. It also uses less memory, reducing the cost to perform tasks for users. However, it faced large-scale malicious attacks and website outages.

Like many other Chinese AI models – Baidu’s Ernie or Doubao by ByteDance – DeepSeek is trained to avoid politically sensitive questions. When the BBC asked the app what happened at Tiananmen Square on 4 June 1989, DeepSeek did not give any details about the massacre, a taboo topic in China, which is subject to government censorship.

DeepSeek is fully available to users free of charge. By contrast, ChatGPT retains a version available for free, but offers paid monthly tiers of $20 and $200 to access additional capabilities.

Developers of the system powering the DeepSeek AI, called DeepSeek-V3, published a research paper indicating that the technology relies on much fewer specialized computer chips than its U.S. competitors do.

DeepSeek also says that it developed the chatbot for only $5.6 million, which if true is far less than the hundreds of millions of dollars spent by U.S. companies in the sector.

“The lower cost to train DeepSeek means it can be offered at a lower cost,” Oren Etzioni, founder of the nonprofit TrueMedia.org and a professor emeritus of computer science at the University of Washington, told ABC News. “That puts pressure on other companies to lower their prices.”

DeepSeek’s developers opted to release it as an open-source product, meaning the code that underlies the AI system is publicly available for other companies to adapt and build upon.

Who Founded DeepSeek

Founded in 2023 by a hedge fund manager, Liang Wenfeng, the company is headquartered in Hangzhou, China, and specializes in developing open-source large language models. Although they claim it came from relatively humble beginnings, and claim they are surprised by the attention it’s getting, many financial experts in the US believe it’s being subsidized by the Chinese government.

Because it is an open-source platform, developers can customize it to their needs. Little known before January, the AI assistant launch has fueled optimism for AI innovation, challenging the dominance of US tech giants that rely on massive investments in chips, data centers and energy.

What is DeepSeek Used For?

Deep Seek AI is at the forefront of this transformation, offering tools that allow users to generate AI avatars, automate content creation, and optimize their online presence for profit.

DeepSeek is very similar to ChatGPT so is used for about the same things. Basic tasks like creating poems, essays, and marketing content, as well as homework for students. It can guide or explain, but its effectiveness depends on the user’s writing. Basic prompts may yield answers similar to search engines, leading users to abandon DeepSeek. This is the user’s fault. It’s generally used to guide or explain something, but its capabilities depend on user writing.

How DeepSeek works

DeepSeek operates as a conversational AI, meaning it can understand and respond to natural language inputs. You can ask it a simple question, request help with a project, assist with research, draft emails and solve reasoning problems using DeepThink.

DeepSeek offers two LLMs: DeepSeek-V3 and DeepThink (R1). DeepSeek-V3 works like the standard ChatGPT model, providing fast responses, generating text, rewriting emails and summarizing documents. DeepThink (R1) provides an alternative to OpenAI’s ChatGPT o1 model, which requires a subscription, but both DeepSeek models are free to use.

They can be accessed via web browsers and mobile apps on iOS and Android devices. In fact, by late January 2025, the DeepSeek app became the most downloaded free app on both Apple’s iOS App Store and Google’s Play Store in the US and dozens of countries globally.

DeepSeek uses advanced machine learning models to process information and generate responses, making it capable of handling various tasks.

How DeepSeek Trained AI 30 Times Cheaper?

DeepSeek is making headlines for its performance, which matches or even surpasses top AI models.

Aside from benchmarking results that often change as AI models upgrade, the surprisingly low cost is turning heads. The company claims to have built its AI models using far less computing power, which would mean significantly lower expenses.

DeepSeek-R1 was allegedly created with an estimated budget of $5.5 million, significantly less than the $100 million reportedly spent on OpenAI’s GPT-4.

DeepSeek’s founder reportedly built up a store of Nvidia A100 chips, which have been banned from export to China since September 2022. Some experts believe he paired these chips with cheaper, less sophisticated ones – ending up with a much more efficient process. And, to continue their work without steady supplies of imported advanced chips, Chinese AI developers have shared their work with each other and experimented with new approaches to the technology.

However, some experts and analysts in the tech industry remain skeptical about whether the cost savings are as dramatic as DeepSeek states, suggesting that the company owns 50,000 Nvidia H100 chips that it can’t talk about due to US export controls.  And, many believe their company has been subsidized by the Chinese government in order to better compete with US companies.

Market disruption and global impact

These claims still had a massive pearl-clutching effect on the stock market. Forbes reported that Nvidia’s market value “fell by about $590 billion Monday, rose by roughly $260 billion Tuesday and dropped $160 billion Wednesday morning.” Other tech giants, like Oracle, Microsoft, Alphabet (Google’s parent company) and ASML (a Dutch chip equipment maker) also faced notable losses.

US tech stocks were steady on Tuesday after they slumped on Monday following the sudden rise of Chinese-made artificial intelligence (AI) app DeepSeek. Shares in chip giant Nvidia rose by 8.8%, having slumped on Monday, as experts said the AI selloff may have been an over-reaction.

The market hit came as investors rapidly adjusted bets on AI, after DeepSeek’s claim that its model was made at a fraction of the cost of those of its rivals. Analysts said the development raised questions about the future of America’s AI dominance and the scale of investments US firms are planning.

US President Donald Trump described the moment as “a wake-up call” for the US tech industry, while also suggesting that it could ultimately prove ” a positive” for the US.

“If you could do it cheaper, if you could do it [for] less [and] get to the same end result. I think that’s a good thing for us,” he told reporters on board Air Force One.

He also said he was not concerned about the breakthrough, adding the US will remain a dominant player in the field.