By Tanner Brown
While major tech players in the West evaluate the level of disruption to come from the breakout performance of Chinese AI platform DeepSeek, with its supposed high performance and low cost, a different narrative is unraveling in China -- among the government, media, rival tech firms, and the country's rapidly expanding AI user base.
"It's thrilling," said Cai Minghan, a Taiwan-based tech analyst. He told Barron's the Chinese AI scene had been set into a frenzy, as in the U.S., but that the nature of it was different.
The start-up claimed its new version matches global leader OpenAI's best model at a fraction of the cost and without access to the most advanced semiconductor chips. Based in Hangzhou, China, where Alibaba Group Holding has its headquarters, DeepSeek also made its models open source, allowing anyone to harness and alter the product for their own use.
"Competitors are racing to show that they also have cutting-edge models, but their stocks have risen, and their forecasts have brightened," he said. That elation is in large part due to the as-yet unproven assertion that DeepSeek used less advanced Nvidia chips and spent a mere $6 million in its final training round. Given that, and the opportunity to harness DeepSeek's open-source framework, Chinese firms' outlooks have only improved, Cai said.
While Alibaba and Tik-Tok owner ByteDance released new versions just days after the DeepSeek uproar -- with both also claiming that their models meet or beat OpenAI's o1 -- investors were bullish about Chinese players' prospects. Alibaba, Tencent Holdings, and Baidu each have climbed since the craze unfolded.
DeepSeek's rollout has also ignited fanfare among average Chinese citizens who previously hadn't been engaged with AI systems.
Zhu Min, a 41-year-old visual artist based in the western megacity of Chengdu, said a group of illustrators and writers she often collaborates with fed just a few details of a historic Chinese emperor into DeepSeek, and asked it to compose a novel that fantasized about alternative versions of his private life and public reign.
"The book was fabulous," she told Barron's, adding that the idea spread among a wider group of artists who have begun using the platform for uniquely creative purposes -- things that she said no one was doing with China's previous leading AI chat tools.
China's government has long been supportive of its AI players -- while making sure they self-censor sensitive political, historical, or Communist Party-related content. That support came in the form of subsidizing access to computing power and compiling data to train AI systems.
As of mid-2024, there were roughly 5,000 AI firms in China, representing an estimated 15% of the global total, according to government data.
But an extra push seems to be taking place. Chinese state-linked social media accounts amplified narratives lauding DeepSeek's breakthroughs, according to a Reuters report that relied on analysis from New York-based online research firm Graphika.
Top Chinese officials have also made time for DeepSeek's now-famous founder and CEO, Liang Wenfeng. On Jan. 20, the day DeepSeek's advanced R1 model was released to the public, Liang attended a closed-door symposium hosted by China's Premier Li Qiang. Liang, long known to be press-shy, was nudged to give a speech at the behest of the Communist Party's number two leader.
While much of the claims DeepSeek has made -- such as the number and type of chips used and the amount of money involved -- is being questioned by some in the West, Chinese experts seem sold on the company's feats.
"If OpenAI is making miracles happen with great effort, then DeepSeek can make miracles happen with little effort," said Liu Wei, director of the Human-Computer Interaction and Cognitive Engineering Laboratory at the School of Artificial Intelligence at Beijing University of Posts and Telecommunications.
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February 08, 2025 03:00 ET (08:00 GMT)
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