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DeepSeek: China’s version of ChatGPT AI anlalysis and break down

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DeepSeek is a groundbreaking AI system from China that has emerged as a significant challenger to established AI leaders. The company recently released two notable models: DeepSeek-V3 in late December 2024 and DeepSeek-R1 on January 20, 2025[2].

Technical Achievements

DeepSeek’s models have demonstrated remarkable capabilities, matching or surpassing performance of industry leaders like OpenAI’s GPT-4, Anthropic’s Claude, and Meta’s Llama in tasks including:

  • Problem-solving
  • Coding
  • Mathematical computations[2][8]

The system stands out for providing reasoning before delivering responses to prompts[1].

Cost Innovation

DeepSeek’s most striking achievement is its cost efficiency:

  • Built for approximately $5.58 million, compared to competitors spending tens or hundreds of millions[2]
  • Uses only about 2,000 Nvidia chips, versus the 16,000+ typically used by leading companies[3]
  • Employs older H800 GPUs instead of advanced H100 models[8]

Technical Architecture

The system achieves its efficiency through innovative approaches:

  • Utilizes multi-head latent attention (MLA)
  • Implements Mixture-of-Experts architecture
  • Replaced traditional Supervised Fine-Tuning with Reinforcement Learning[6][8]

Market Impact

DeepSeek has made significant waves in the technology sector:

  • Became the top-rated free app on Apple’s App Store in multiple countries[1]
  • Caused stock price drops for major US AI companies including Nvidia, Meta, and Microsoft[1]
  • Released as open-source, allowing developers to examine and build upon the model[5]

Accessibility

The system offers several advantages for users:

  • Completely free access, unlike competitors requiring paid subscriptions
  • Open-source nature enabling examination and modification
  • Unlimited usage without restrictions[1][4]

This combination of high performance, cost efficiency, and accessibility has established DeepSeek as a transformative force in the AI landscape[9].

Citations:
[1] https://economictimes.indiatimes.com/news/international/global-trends/what-is-deepseek-ri-chinese-ai-model-that-rattled-chatgpt-openai-nvidia-and-freaked-out-ai-world/articleshow/117607991.cms
[2] https://www.livescience.com/technology/artificial-intelligence/china-releases-a-cheap-open-rival-to-chatgpt-thrilling-some-scientists-and-panicking-silicon-valley
[3] https://timesofindia.indiatimes.com/technology/tech-news/how-deepseek-the-chinese-competitor-to-american-ai-companies-openai-google-and-microsoft-solves-one-of-the-biggest-china-problem/articleshow/117583639.cms
[4] https://www.calcalistech.com/ctechnews/article/hkfa5yr00jg
[5] https://www.nature.com/articles/d41586-025-00229-6
[6] https://bgr.com/tech/why-is-deepseek-ai-suddenly-so-popular/
[7] https://www.biometricupdate.com/202501/chinas-deepseek-ai-poses-formidable-cyber-data-privacy-threats
[8] https://indianexpress.com/article/technology/artificial-intelligence/deepseek-is-this-chinas-chatgpt-moment-and-a-wake-up-call-for-the-us-9799686/
[9] https://www.digit.in/features/general/deepseek-praised-by-silicon-valley-the-6-million-ai-disruption.html
[10] https://www.technologyreview.com/2025/01/24/1110526/china-deepseek-top-ai-despite-sanctions/
[11] https://www.jomfruland.net/tech-stock-turmoil-are-u-s-giants-losing-their-edge/

Download the source code:
To download and run DeepSeek models locally, there are several options depending on which version you want to use:
Nvidea Nano device to handle the LLM’s. ( https://www.youtube.com/watch?v=YnoeWXh3-q0 )

Using Ollama (Easiest Method)

  1. Install Ollama from ollama.com[5]
  2. Download DeepSeek-R1 through Ollama’s interface
  3. Run the model locally using Ollama’s web UI[5]

Direct Model Downloads

DeepSeek-V3

git clone https://github.com/deepseek-ai/DeepSeek-V3.git
cd DeepSeek-V3/inference
pip install -r requirements.txt

DeepSeek-V2
Available in different sizes:

  • V2-Lite: 16B parameters (2.4B activated)
  • V2: 236B parameters (21B activated)[1][3]

Hardware Requirements

For Full Models:

  • DeepSeek-R1: 400GB+ disk space
  • Significant CPU/GPU resources
  • Large RAM capacity[9]

For Compressed Versions:

  • Lite models: 1-40GB disk space
  • Single GPU with 40GB memory for V2-Lite
  • 8x80G GPUs for fine-tuning[1]

Alternative Access Methods

  • Web interface: chat.deepseek.com
  • API access: platform.deepseek.com (includes free tokens)[3]

The most practical approach for most users is to start with Ollama, as it handles the installation process automatically and provides an easy-to-use interface for running the models locally[5].

Citations:
[1] https://huggingface.co/deepseek-ai/DeepSeek-V2-Lite
[2] https://huggingface.co/deepseek-ai/DeepSeek-V3
[3] https://huggingface.co/deepseek-ai/DeepSeek-V2
[4] https://www.youtube.com/watch?v=P3BKdSKi1VI
[5] https://www.youtube.com/watch?v=rzMEieMXYFA
[6] https://www.deepseek.com
[7] https://github.com/Doriandarko/deepseek-engineer
[8] https://www.reddit.com/r/ChatGPTCoding/comments/1hyo0o8/how_to_let_claudegptdeepseek_read_from_github/
[9] https://www.youtube.com/watch?v=1zsK0U33hN4
[10] https://github.com/cohesion-org/deepseek-go
[11] https://github.com/inferless/Deepseek-coder-6.7b-instruct
[12] https://www.youtube.com/watch?v=TpNwYA8Eqhk

SWOT Analysis
Here’s a comprehensive SWOT analysis of DeepSeek based on the latest information:

Strengths

  • Exceptional cost efficiency, developing AI models for only $5.6-6 million[1][2]
  • Top-rated performance matching or exceeding established competitors like ChatGPT[4]
  • Innovative technical architecture requiring fewer resources (2,000 GPUs vs typical 16,000)[8]
  • Strong market penetration, reaching #1 on Apple’s App Store[6]

Weaknesses

  • Security vulnerabilities discovered in previous versions[3]
  • Limited transparency about company background and operations[6]
  • Heavy reliance on Chinese datasets and infrastructure[3]
  • Potential restrictions from international regulations and scrutiny

Opportunities

  • Disruption of traditional AI cost structures[4]
  • Market expansion through open-source strategy[7]
  • Potential to reshape global AI development economics[2]
  • Growing demand for cost-effective AI solutions[6]

Threats

  • Heightened cybersecurity and privacy concerns[3]
  • International regulatory scrutiny and restrictions[3]
  • Geopolitical tensions affecting global expansion[3]
  • Competition from established tech giants with deeper resources
  • Market volatility and investor skepticism in the AI sector[1]

Citations:
[1] https://www.nytimes.com/2025/01/27/business/dealbook/deepseek-tech-stocks-reckoning.html
[2] https://www.cbsnews.com/news/what-is-deepseek-ai-china-stock-nvidia-nvda-asml/
[3] https://www.biometricupdate.com/202501/chinas-deepseek-ai-poses-formidable-cyber-data-privacy-threats
[4] https://www.marketpulse.com/fundamental/deepseek-vs-us-tech-giants-the-battle-for-ai-supremacy-and-its-market-impact/zvawda
[5] https://www.investing.com/news/analyst-ratings/morgan-stanley-sees-deepseek-cutting-ai-costs-bullish-for-data-centers-93CH-3832480
[6] https://www.cbc.ca/news/business/deepseek-ai-startup-1.7442382
[7] https://www.investing.com/news/stock-market-news/deepseeks-ai-model-is-a-minimal-threat-to-ai-revolution-thesis-dan-ives-3831935
[8] https://ioplus.nl/en/posts/deepseeks-affordable-ai-shocks-the-global-chip-market